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Investors Splash N12.56 Trillion on Fixed Income, Currency Instruments in February



capital market
  • Investors Splash N12.56 Trillion on Fixed Income, Currency Instruments in February

Trading activities in Nigeria’s Fixed Income and Currencies (FIC) markets in February enjoyed a boost as investors, mostly banks, increased their stake by N860 billion. Transaction turnover for February increased to N12.56 trillion, from N11.71 trillion recorded in January, representing a 7.34 per cent growth month on month (MoM) and 3.46 per cent or N420 billion increase year on year (YoY).

In contrast, the markets recorded a drop in turnover to the tune of N150 billion in January, representing 1.28 per cent decrease compared to the value recorded in December 2017. Year on year, however, turnover was up by 28.17 per cent in January 2018 or N2.57 trillion.

Three segments – Treasury Bills, Foreign Exchange and the Money Market (Repurchase Agreements/Buy-Backs and Unsecured Placements/Takings) – contributed 94.47 per cent to the total turnover in the FIC markets in the review month.

As usual, activities in the Treasury Bills (T.bills) market were more robust than others, as it accounted for 44.44 per cent of market turnover in February, compared to 39.24 per cent in January. The Foreign Exchange (FX) market accounted for 33.13 per cent of the total turnover (37.50 per cent in January).

Transactions in the FX market settled at $12.92 billion (N4.16 trillion) in February, a decrease of 7.78 per cent ($1.09 billion) when compared with the value recorded in January ($14.01 billion).

In the month under review, the naira depreciated at the Investors’ and Exporters’ (I&E) FX Window, closing the month at $/N360.41 (from $/N360.00 as at January 31, 2018), while also trading at a discount to the parallel market, which closed at $/N363.00 (from $/N364.00 as at January 31, 2018).

The CBN4 Official Spot rate depreciated slightly, losing N0.20 to close at $/N305.90 (from $/N305.70 as at January 31, 2018).

Total value traded at the I&E FX Window in February settled at $3.90billion, a decrease of 25.71 per cent ($1.35 billion) relative to the value recorded in January ($5.25 billion). This brings the total value traded at the Window Year to Date to $9.15 billion.

Inter-Member trades recorded $1.36 billion in February, an increase of 23.64 per cent ($0.26 billion) relative to the trades recorded in January ($1.10 billion), and a 63.86 per cent ($0.53 billion) increase year on year.

Member-Client trades stood at $7.45 billion, a decrease of 14.65 per cent ($1.27 billion) from the previous month and a 30.02% ($1.72 billion) increase year on year.

Member-CBN trades recorded $4.11 billion in February ($4.18 billion in January), representing a decrease of 1.67 per cent ($0.07 billion) MoM and a 204.44 per cent ($2.76 billion) increase YoY ($1.35 billion), as the effect of the Secondary Market Intervention Sales (SMIS) continued to boost activity in the FX markets.

The 19th Naira-settled OTC FX Futures contract, NGUS FEB 28, 2018, worth $353.26 million, matured and settled in February, while a new 12-month contract – NGUS FEB 27, 2019 – for $1 billion was introduced by the CBN at $/N362.09.

Turnover in the Fixed Income market for the month under review settled at N6.27 trillion, a 17.63 per cent increase MoM (0.93 trillion). Transactions in the T.bills market accounted for 89.06 per cent of the overall Fixed Income market, an increase from the 86.11 per cent recorded in January.

Outstanding T.bills at the end of the month stood at N12.56 trillion (N11.47 trillion in January), an increase of 9.56 per cent MoM (₦1.91 trillion). FGN bonds outstanding value also increased marginally close at N7.73 trillion, from N7.64 trillion in January.

Trading intensity in the fixed income market for the month under review settled at 0.44 and 0.09 for T.bills and FGN bonds, respectively, from 0.40 and 0.10 respectively recorded the previous month. T.bills between the six and 12 months maturity buckets became the most actively traded, accounting for a turnover of N2.23 trillion in February while short-term yields on the sovereign yield curve increased by an average of 29 basis points (bps) and yields in the medium- and long-term spectrum gained an average of 0.34bps and 0.21bps, respectively.

The spread between 10-year and 3-month benchmark yields closed negative at 1.17 basis points for February 2018 (0.49 bps in January)

Activities in the secured Money Market (i.e. Repos/Buy-Backs) settled at N2.03 trillion in February, 9.14 per cent (N0.17 trillion) higher than the value recorded in January (N1.86 trillion). Year on year, turnover on Repos/Buy-Backs recorded a 21.02 per cent increase (N0.35 trillion) from the value recorded in February 2017 (N1.68 trillion).

Unsecured Placements/Takings closed the month at a turnover of N93.75 billion, a 22.27 per cent decrease (N26.85 billion) from the figure recorded in January (N120.61 billion) and a 33.6 per cent decrease (N47.51 billion) on YoY basis (N141.27 billion as at February 2017).

Average O/N8 NIBOR9 for the period under review stood at 19.91 per cent (11.24 per cent in January), indicating a decrease in inter-bank liquidity.

The number of executed trades captured on the E-Bond Trading System in February amounted to 16,325 as against 17,041 recorded in January while executed T.bills trades decreased by 3.69 per cent (539), similarly FGN bonds decreased by 7.22 per cent (177).

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


More Retirees Quit Pension Scheme, Collects N28.46 Billion




114,837 Retirees Quit Pension Scheme, Collects N28.46 Billion

Thousands of retirees whose employers did not adequately fund their Retirement Savings Accounts and retired with balances below N550,000 have collected their contributions and quit the Contributory Pension Scheme (CPS).

A total of 114,837 employees who retired after attaining the age of 50 and had less than N550,000 in their CPS account had collected their contributions and left the scheme as of the end of June 2020.

This includes contributors from the state, federal and private sectors.

In the quarterly report released on Friday by the PenCom, these retirees withdrew a total sum of N28.46 billion since the inception of the scheme till June.

The report showed about 6,561 of the total retirees that left the program were from the Federal Government sector while 3,879 and 104,397 were from the state and private sectors, respectively.

The report also showed that some of those who collected their contributions included foreign nationals who retired and returned to their countries of origin.

A further breakdown showed as of the end of third quarter of 2019, a total of 109,284 retirees with similar low balances withdrew N27.09 billion. While by the final quarter of 2019, 2,241 retirees withdrew about N569.27 million.

In the first quarter and second quarter of 2020, about 2,227 and 1,085 retirees withdrawn N531.95 million and N274.09 million, respectively. Bringing the total from inception to N28.46 billion.

PenCom stated in its Q2 report on en-bloc payments that, “The commission granted approval for the payment of the entire RSA balances of the categories of retirees whose RSA balances were N550,000 or below and considered insufficient to procure a programmed withdrawal or annuity of a reasonable amount over an expected life span.

“Approval was also granted for payment of RSA balances to foreign nationals who decided to return to their home countries after making contributions under the CPS.

“Accordingly, the sum of N274.78m was paid to 1,085 retirees, which comprised 140 from the public sector retirees (FGN and state) and 1,085 from the private sector retirees during the second quarter.

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Central Bank to Promote Zero Balance Account Opening to Drive Financial Inclusion



Central Bank

Banks Now Accept Zero Balance Account Opening to Deepen Financial Inclusion

In an effort to boost financial inclusion in the country, the Central Bank of Nigeria has said it would start promoting zero balance account opening to encourage and lure the unbanked into the banking system.

The apex bank disclosed this in its report titled ‘Monetary, credit, foreign trade and exchange policy guidelines for fiscal years 2020/2021’.

The report read in part, “As part of its effort towards promoting greater financial inclusion in the country, the bank shall continue to encourage banks to intensify deposit mobilisation during the 2020/2021 fiscal years.

“Accordingly, banks shall allow zero balances for opening new bank accounts and simplify their account opening processes, while adhering to Know-Your-Customer requirements.

“Banks are also encouraged to develop new products that would provide greater access to credit.”

The apex bank said the Shared Agency Network Expansion Facility, launched to deepen provision of financial services in under-served and unserved locations and drive financial inclusion through agent banking, would continue in the 2020/2021 fiscal years.

Banks, mobile money operators and super-agents would also continue to render returns in the prescribed formats and frequency to the CBN.

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Investors Oversubscribed for FGN Bonds by N205.87 Billion in October




FG October Bonds Oversubscribed by N205.87 Billion

The Debt Management Office (DMO) has said investors oversubscribed for the Federal Government’s October bonds by N205.87 billion.

The DMO stated this after concluding the monthly FGN bonds auction on Wednesday.

Two instruments of 12.5 per cent FGN March 2035 re-opening 15-year bond and 9.8 per cent FGN July 2045 re-opening 25-year bond were auctioned.

The two bonds of N15bn each with a total auction figure of N30bn received a subscription of N235.87bn.

The 15-year tenor and 25-year tenor bonds received 99 and 67 bids but recorded 21 and 26 successful bids respectively.

The amounts allotted for each of the bids were N20bn and N25bn respectively.

According to the DMO, successful bids for the 15-year tenor bond and 25-year tenor bonds were allotted at the marginal rates of 4.97 per cent and six per cent respectively.

However, it added, the original coupon rates of 12.5 per cent for the 12.5 per cent FGN March 2035 bond and the 9.8 per cent for the 9.8 per cent FGN July 2045 bonds would be maintained.

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