Nigeria’s telecom companies received a boost in November when it was announced that they had received approval-in-principal to receive Payment Service Bank (PSB) licenses. Stock prices flew. For those with an envious eye on Safaricom in Kenya, this was their moment. However, Nigeria in 2021 is a very different place to Kenya in 2007 when Safaricom launched its M-Pesa product. Technology has taken root in Nigeria’s payments business and competition abounds. Proshare Nigeria Pvt. Ltd. FX
Last week, the exchange rate at the Investors and Exporters Window (I&E Window) appreciated by 0.08% to close at N414.73/US$1. The Central Bank of Nigeria has continued to intervene in the FX markets and, quite likely as a result of this, there was a small decline in its foreign exchange (FX) reserves to US$41.19bn, a fall of 0.22% on the week and the fifth consecutive weekly decline. The level of FX reserves remains high in historical terms and therefore the position of the CBN looks strong. As liquidity rises in the the official FX markets it seems possible that stability will be maintained in the I&E and NAFEX rates towards the end of the year
Bonds & T-bills
Last week, activity in the Federal Government of Nigeria (FGN) bond secondary market was mixed as market participants remained on the sidelines. As a result, the average benchmark yield for bonds was flat at 11.42%. However, on benchmark notes, the yields of the 3-year (- 1bp to 9.34%), 7-year (-12bps to 11.86%) and the 10-year (-18bps to 12.11% ) bonds tightened. We reiterate our expectation that a future rise in bond yields is unlikely to be sharp as the monetary authorities appear content with recent economic and monetary outcomes during 2021: a return to economic growth; falling inflation (albeit falling slowly); a high level of foreign exchange reserves; successful financing in the international capital markets (Eurobonds).
Trading in the Treasury Bill (T-Bill) secondary market closed bullish. The average benchmark yield for T-bills fell by 49bps to 4.36%, with the yield on a 356-day T-bill closing at 5.64%. Elsewhere, the average yield for OMO bills fell slightly by 3bps to 5.48%, with the yield on a 305-day OMO bill declining by 1bp to 6.32%. The CBN sold N37bn worth of bills to investors at an OMO auction, maintaining stop rates across the three tenors. The market continues to be liquid.
Oil
Last week, the price of Brent […]
