Nigerian banks have agreed to assist in the payment of N25bn legacy debts owed gas companies by the defunct Power Holding Company of Nigeria. The banks made this known on Thursday during a meeting of the Bankers’ Committee in Lagos. Industry analysts said the announcement was part of the moves by the banks to recover loans advanced to the power firms carved out of the PHCN during the power sector privatization exercise. The committee said it had realized that lack of adequate gas supply was inhibiting the growth of the power sector. It, therefore, said the decision to help with the payment of the NGN25 billion debt owed the gas companies was because of its commitment to support the gas to power project in order to improve production in the sector. (Source: Punch)
Despite market liquidity levels rising on the back of NGN134.28 billion repaid maturities, interbank lending rates across most tenors (with the exception of the overnight rate which dropped by 89bps to close at 10.92%) by 9bps on the average owing to increased funding requirement driven by Wednesday’s Bond auction.
Fixed Income Market
Trading in the T-bills market was flat as no significant demand or supply was recorded.
Activity levels in the bond market picked up on Thursday driven largely by post-auction sales which pushed yields up. Market yields are expected to edge higher further as post-auction sell-off persists.
The Nigerian Interbank FX Market
The recent trend in the FX inter-bank market reversed and the Naira dipped against the dollar on Thursday as the local currency depreciated significantly by 70 kobo to close trading at NGN162.50/$.
Nigerian Stock Market Report
Trading on the floor of the Nigerian Stock Exchange closed on a negative note on Thursday as the NSE All Share Index lost 0.0067% to close at 41,750.38 points from 41,753.19 on Wednesday. The market capitalization also dropped to NGN13.785 trillion from NGN13.786 trillion on Wednesday.
Application for unemployment benefits in the U.S. rose more than forecast last week, interrupting a steady decline to pre-recession lows. Jobless claims climbed by 21,000 to 311,000 in the period ended Aug.9, the highest in six weeks.
In the European region, Germany’s economy shrank in the second quarter and France again managed to conjure up no growth, data showed on Thursday, snuffing out any signs of a recovery in the euro zone which is now weighed down by tit-for-tat sanctions with Russia.
Global Currency Update
The U.K pound traded at $1.6686, down from $1.6688 late Wednesday, after falling on a lackluster report on U.K wage growth that raised the prospect that the central bank would push back the timing of an interest rate increase. The euro dipped to $1.3361 from $1.3366 late Wednesday. The dollar traded at ¥102.52, up from ¥102.42 late Wednesday. The dollar had climbed as high as ¥102.66 during the Japanese trading day.
U.S oil tumbled by 2% on Thursday, as higher U.S jobless claims and a German economic contraction highlighted weak demand, while supplies are ample despite conflicts in Iraq and Libya.
Gold prices settled modestly higher on Thursday, logging a third straight daily gain, as investors shrugged off a bigger than expected rise in U.S. jobless claims, while conciliatory comments from Russian President Vladimir Putin eased jitters about the Ukraine crisis that had prompted some safe-haven buying bullion.
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