STL TRUSTEES CAPITAL MARKET & MONEY MARKET NEWS RECAP

STL TRUSTEES CAPITAL MARKET & MONEY MARKET NEWS RECAP

While you were away!

FINAL MPC MEETING FOR THE YEAR 2018, MPR RETAINED AT 14%

The Central Bank of Nigeria (CBN) hosted its 264th Monetary Policy Meeting on Wednesday and Thursday 21^st and 22^nd of November 2018. At the meeting which was also the last meeting for the year 2018, the decision was made to retain the MPR at 14%, with all other variables unchanged. i.e., Liquidity ratio was left at 30%, Cash Reserve Ratio at 22.5%, and the asymmetric corridor unchanged at +200/-500 basis points.

The CBN Governor Godwin Emefiele announced this at the end of the meeting, stating that all 11 members present at the meeting voted for a HOLD. The HOLD decision means the rates have been left unchanged for the 18th consecutive time since July 2016.

MPR is the interest rate at which CBN lends to the commercial banks. The MPR is the benchmark against which other lending rates in the economy are pegged and is usually used as an instrument to moderate inflation in the economy.

CRR simply refers to the ratio of customer deposits (i.e. your money in the bank) banks are expected to hold as cash or keep with the CBN.

Liquidity ratio refers to the amount of highly liquid assets that banks should hold in order to meet their financial obligations to customers.

The asymmetric corridor is the range within which the MPR can be increased or decreased.

NOVEMBER 2018 FGN BOND AUCTION: DEBT MANAGEMENT OFFICE ALLOTS N39.52 BILLION FGN BONDS TO INVESTORS

The Debt Management Office (DMO) announced on Wednesday 21^st November 2018 that as a result of the Federal Government Bonds auctioned for November 2018, the Debt Management Office (DMO) sold N39.52 billion.

Three Bonds in tenors of 5 years, 7 years and 10 years were offered at the Auction and allotments were made to the successful bidders at 15.20% for the 5-year, 15.50% for the 7-year and 15.83% for the 10-year Bond.

Although subscription levels were higher than the amount allotted, it was observed that the DMO was unwilling to accept higher rates from subscribers in order to moderate debt service cost and maintain market stability as the rates at which each of the Bonds were allotted were close to their Secondary market Yields.

FGN’s LATEST EUROBOND OVERSUBSCRIBED BY $9.5bn

The Federal Government of Nigeria (FGN) on Thursday 15^th November, 2018 announced that it has priced its offering of US$2.86 billion aggregate principal amount of triple series notes (the “Notes”) under its Global Medium-Term Note Programme. The offering attracted significant interest from leading global institutional investors with a peak combined order book of over US$9.5 billion, which reflects an over-subscription of more than 3 times and demonstrates the on-going confidence of international capital market investors in Nigeria’s investment story.

Despite significant oil and wider macro market volatility, Nigeria has successfully raised its external debt requirements for the 2018 budget at a cost considerably lower than many of its peers across Sub-Sahara Africa. The successful transaction follows closely behind Nigeria’s successful engagement with the Fitch rating agency, and their subsequent decision to change the outlook on Nigeria’s sovereign rating from B+ (negative) to B+ (stable), based on improving macro-economic fundamentals.

The Notes comprise a US$1.18 billion 7-year series, US$1.00 billion 12-year series and a US$750 million 30-year series. The 7-year series will bear interest at a rate of 7.625%, while the 12-year series will bear interest at a rate of 8.75%, and the 30-year series will bear interest at a rate of 9.25%. In each case, they will be repayable with a bullet repayment of the principal on maturity.

The proceeds of the Notes would be used towards funding of the fiscal deficit and other financing needs of the Country. The Notes represent the Federal Government’s sixth Eurobond issuance, following issuances in 2011, 2013, two in 2017 and one in early 2018 and its first triple-tranche offering.

The Notes will be admitted to the official list of the UK Listing Authority and available to trade on the London Stock Exchange’s regulated market.

The pricing was determined following a series of meetings with investors in London and conference calls with investors globally attended by the Nigerian delegation, which comprised the Honourable Minister of Finance, Zainab Shamsuna Ahmed, the Honourable Minister of Budget and National Planning, Senator Udoma Udo Udoma, Central Bank Governor, Godwin Emefiele, Director General of the Debt Management Office (DMO), Patience Oniha, and Director General of the Budget Office of the Federation, Ben Akabueze. The Joint Lead Managers for the issuance were Citibank Global Markets Limited and Standard Chartered Bank and the financial advisors were FSDH Merchant Bank Limited.

DOLLAR EXCHANGE RATE REPORT 12TH^TH NOVEMBER TO 23^RD NOVEMBER 2018

This report is a compilation of the dollar exchange rate at the official and parallel market from the 12^th of November to the 23^rd of November 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.