STL Trustees Capital Market & Money Market News Recap

While you were away!

CBN MAINTAINS MPR AT 14% IN ABSENCE OF MPC QUORUM

The Central Bank of Nigeria (CBN), has announced that in the absence of a quorum for what would have been the first Monetary Policy Committee (MPC) meeting for 2018, the Monetary Policy Rate (MPR) shall be retained at 14% and all other variables shall remain constant.

In a circular published on Monday 22^nd January 2018, the CBN said:

“The CBN shall continue to maintain key monetary policy variables as decided by the last MPC meeting (November 2017) as follows:

MPR at 14.0 percent;

 CRR at 22.5 percent;

Liquidity Ratio at 30.0 percent; and

The Asymmetric Corridor at +200 and -500 basis points around the MPR”

The MPC meeting which was scheduled for January 22 to 23, 2018 was unable to hold due to quorum issues. There are currently only five members of the committee available, whereas the quorum ought to be six out of 12 members, as defined by the second schedule of the CBN Act.

In recent times the board has experienced depletion due to most members reaching their retirement age and other related issues.

The MPC, according to information on the website of the CBN, shall comprise the governor of the Bank who shall be the chairman; the four deputy governors of the Bank; two members of the board of directors of the Bank; three members appointed by the president; and two members appointed by the governor.

SEC AGAIN EXTENDS FREE E- DIVIDEND REGISTRATION TO 28^TH FEBRUARY 2018

The Securities and Exchange Commission (SEC) has announced that the closing date for the free e-dividend registration has again been extended to February 28, 2018.

SEC in a statement said the extension became necessary to allow more shareholders to participate in the initiative.

The statement said: “in reviewing the progress of the e-Dividend Registration after the Dec. 31, 2017 deadline, there was still a great influx of shareholders desirous of mandating their Bank accounts for payment of dividends electronically”.

“in light of the foregoing, the sec, as part of its developmental role, has extended the period for the free e-dividend registration till Feb. 28, 2018, to encourage more shareholders mandate their bank accounts.”

“accordingly, shareholders that are yet to register should continue to approach their banks or registrars to mandate their bank accounts for the collection of their dividends electronically, including unclaimed dividends, not exceeding 12 years of issue,” it said.

Acting Director-General of SEC, Dr. Abdul Zubair, who also made the announcement at a news conference recently, said that all investors that had yet to enroll are enjoined to continue with the registration.

This he said was to “encourage many more investors to consolidate their multiple subscriptions into one account, the SEC wishes to announce an extension of the forbearance for Multiple Accounts till March 31, 2018.

“accordingly, investors that bought shares of the same company during public offers, using different names, are allowed till March 31, 2018, to continue to approach their stockbrokers or registrars, to regularize their shareholdings in line with sec rules on customer identification,” he said.

The commission has also notified registrars to halt the issuance of paper warrants with effect from January 1st, 2018.  Paper warrants issued prior to that date remain valid and should be accepted by banks.

SEC launched the e-dividend platform in July 2015 and set December 2015 as a deadline. After protests by shareholders, the deadline was shifted to December 2016. In January 2017, it decided to extend it till June 30, 2017. It was again extended until December 31st, 2017. SEC also created a portal, for shareholders to search for stocks they own and register for electronic dividends.

FEDERAL GOVERNMENT CONSIDERING $2.5 BILLION EUROBOND RAISE

The Federal Government (through the Debt Management Office DMO) may be considering a $2.5 billion Eurobond in the first quarter of this year. Director-General of the DMO, Patience Oniha disclosed this in an interview with Bloomberg. This is dependent on market conditions and may be in tranches. The bonds form part of a $5.5 billion debt programme that began last year and was massively oversubscribed.

Eurobonds are bond raised in a currency other than that of the issuing nation, usually dollars. Nigeria has embarked on an increase in foreign borrowing to take advantage of lower interest rates and reduce the crowding out effect on corporate issuers.

Proceeds from the bond exercise will be used to lug a budget deficit.

CBN GOVERNOR GODWIN EMEFIELE HINTS AT INTEREST RATE CUT BEFORE JULY

The Central Bank of Nigeria (CBN) Governor Godwin Emefiele has given an update on when the bank is likely to lower interest rates. He disclosed this on Wednesday 24^th January 2018,  in an interview with Bloomberg.

“once inflation gets to low double digits and high single-digit happens, then it should be easy for mpc to begin to look at easing. I want to think that between the end of the first and second quarter, we should begin to see easing.”

Emefiele also revealed that the apex bank was in discussions with the National Assembly regarding screening of its nominees.  The Senate is yet to screen Deputy Governor Aishah Ahmed and several Monetary Policy Committee (MPC) nominees. The absence of a quorum led to its first meeting of the year scheduled to hold this week being postponed and the apex bank leaving interest rate and other variables unchanged.

In addition, he expressed optimism that inflation rates would continue to fall.

A drop in the CBN’s Monetary Policy Rate (MPR) in theory should lead to a drop in the interest rates commercial banks charge their customers. A lowering of the interest rate is however dependent on a drop in inflation rates. The CBN tends to keep the interest rate at par or slightly ahead of inflation rates.

Inflation rates spiked last year due to a devaluation of the Naira against the dollar, hitting nearly 18%. A fall in global crude oil prices and production volumes led to a foreign exchange liquidity crisis in the first half of 2017.

 DOLLAR EXCHANGE RATE REPORT 15^TH JANUARY TO 26^TH JANUARY 2018

This report is a compilation of the dollar exchange rate at the official and parallel market from the 15^th of January to the 26^th of January 2018.  The quoted parallel market prices are to serve as a guide to readers, as they represent the average price obtained daily from different black market dealers in the Country.