Economy
Investors Anticipate Huge Rise in Treasury Bills Rates Before Year End
By Dipo Olowookere
There are high expectations that treasury bills rates would increase before the end of this year till early next year, when the country heads to the polls to elect their new leaders.
The expected hike in rates may likely be one the moves by the Central Bank of Nigeria (CBN) to reduce the rate at which investors are pulling their funds out of the country’s economy to where they can get better yields on their investment.
Since the United States, through the Federal Reserve, hiked its benchmark short-term interest rate, investors have been exiting emerging markets, including Nigeria.
This has in one way or another affected the Nigerian economy, especially the stock and the fixed income markets.
As part of efforts to make the Nigerian market still attractive to foreign portfolio investors, the CBN is likely to increase the treasury bills rates.
This was slightly evident in the primary auction conducted by the central bank on Wednesday, where the rates cleared higher than what were obtained two weeks ago, when the CBN sold fresh T-bills to investors.
According to an analysis done by Business Post, at the August 1, 2018 PMA, the 91-day bills cleared at 10 percent, the 182-day bills at 10.40 percent and the 364-day bills at 11.30 percent.
At the next exercise conducted on August 15, 2018, while both the 91-day and 182-day bills remained unchanged, the 364-day bills dropped to 11.22 percent.
However, at the PMA held yesterday, August 29, 2018, the rates for the three papers increased sharply.
Business Post observed that the 91-day bills cleared at 11 percent, the 182-day bills at 12.30 percent and the 364-day bills at 13.05 percent.
Over three weeks ago, Deputy Governor of the CBN, Mr Joseph Nnanna, hinted that the apex bank may tighten and increase its main interest rate if the nation’s inflation rate fails to decline.
According to the National Bureau Statistics (NBS), headline inflation eased to 11.14 percent year-on-year in the month of July 2018 from 11.14 percent from 11.23 percent recorded in June 2018.
Mr Nnanna had explained to Bloomberg that, “These factors would warrant a rate increase to send the right signal to the public, that the central bank will tighten policy to respond to higher inflation.
“There’s a scope to raise rates before the elections in February.
“The central bank is still in the mood for tightening,” he said. “How fast are we going to tighten is what members [of the Monetary Policy Committee] haven’t agreed upon.”
Treasury bills rates started to decline from 2017 when the federal government said it was reducing the rate it was borrowing at the local market.
At a point last year, treasury bills rates were over 18 percent and it became very attractive to investors, who flooded the market.
But since the government reduced its local borrowing, the rates have dropped, making it less attractive to both local and foreign investors.
If the rates skyrocket again as anticipated as the year ends, more investors, especially foreign, would be forced to enter the market again, reducing capital flight.
By Aduragbemi Omiyale
On Tuesday, December 17, 2024, President Bola Tinubu will present the 2025 budget to a joint session of the National Assembly.
The size of the 2025 Appropriation Bill is about N47.9 trillion and would be presented to the parliament for approval.
Speaking at the plenary on Thursday, December 12, 2024, the President of the Senate, Mr Godswill Akpabio, said the presentation by Mr Tinubu would be at the chamber of the House of Representatives.
However, it is not certain if the lawmakers will pass the budget before December 31 to allow for a recent budget cycle of January to December.
Recall that on December 3, the senate approved the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) for 2025 to 2027.
This was after the President presented this the National Assembly on November 19 ahead of the consideration of the 2025 budget proposal.
In the MTEF/FSP, the government said it planned to borrow about N9.22 trillion from local and foreign sources to finance the budget deficit.
It pegged the crude oil benchmark at $75 per barrel and a daily oil production of 2.06 million barrels at an exchange rate of N1,400 to $1, and a targeted gross domestic product (GDP) growth rate of 6.4 percent.
At the plenary today, Mr Akpabio informed his colleagues that, “The President has made his intention known to the National Assembly to present the 2025 budget to the joint session of the National Assembly on December 17, 2024.”
By Adedapo Adesanya
Nigeria added 150,000 barrels per day to its crude production in November 2024 as it continues to pursue an ambitious 2 million barrels per day target.
According to the Organisation of the Petroleum Exporting Countries (OPEC), Nigeria’s oil production rose to 1.48 million barrels per day in November, up from 1.33 million barrels per day the previous month.
In its Monthly Oil Market Report (MOMR), OPEC revealed that at 1.48 million barrels per day, it is the continent’s leading oil producer, surpassing Algeria’s 908,000 barrels per day and Congo’s 268,000 barrels per day.
Business Post reports that OPEC doesn’t account for condensates, which Nigeria’s accounts for in its broader 2 million barrels per day target.
Despite the surge in production levels, Nigeria is still under producing its 1.5 million barrels per day output quota under a deal involving OPEC and 10 other producers known as OPEC+.
OPEC said it relied on primary data gotten through direct communication, noting that secondary sources reported 1.417 million barrels per day as Nigeria’s crude production in November — up from 1.4 million barrels per day in October.
The data also shows that OPEC’s total oil production among its 12 members rose by 104,000 barrels per day in the month under review.
According to secondary sources, the total of the 12 OPEC countries’ crude oil production averaged 26.66 million barrels per day in November 2024.
“Crude oil output increased mainly in Libya, Iran, and Nigeria, while production in Iraq, Venezuela, and Kuwait decreased”, OPEC said.
“At the same time, total non-OPEC DoC crude oil production averaged 14.01 mb/d in November 2024, which is 219 tb/d higher, m-o-m. Crude oil output increased mainly in Kazakhstan and Malaysia,” the organisation added.
In a related development, OPEC trimmed its 2024 and 2025 oil demand growth forecasts for the fifth time this year.
Now, the cartel expects the world’s oil demand growth at 1.61 million barrels per day from the previously 1.82 million barrels per day.
For 2025, OPEC says the world oil demand growth forecast is now at 1.45 million barrels per day, a 900,000 barrels per day cut from the previously expected 1.54 million barrels per day.
On the changes, OPEC says that the downgrade for this year owes to more bearish data received in the third quarter of 2024 while the projections for next year relate to the potential impact that will arise from US tariffs.
By Adedapo Adesanya
The duo of Afriland Properties Plc and Geo-Fluids Plc crashed the NASD Over-the-Counter (OTC) Securities Exchange by a marginal 0.06 per cent on Wednesday, December 11 due to profit-taking activities.
The OTC securities exchange experienced a downfall at midweek despite UBN Property Plc posting a price appreciation of 17 Kobo to close at N1.96 per share, in contrast to Tuesday’s closing price of N1.79.
Business Post reports that Afriland Properties Plc slid by N1.14 to finish at N15.80 per unit versus the preceding day’s N16.94 per unit, and Geo-Fluids Plc declined by 1 Kobo to trade at N3.92 per share compared with the N3.93 it ended a day earlier.
At the close of transactions, the market capitalisation of the bourse, which measures the total value of securities on the platform, shrank by N650 million to finish at N1.055 trillion compared with the previous day’s N1.056 trillion and the NASD Unlisted Security Index (NSI) went down by 1.86 points to wrap the session at 3,012.50 points compared with 3,014.36 points recorded in the previous session.
The alternative stock market was busy yesterday as the volume of securities traded by investors soared by 146.9 per cent to 5.9 million units from 2.4 million units, as the value of shares transacted by the market participants jumped by 360.9 per cent to N22.5 million from N4.9 million, and the number of deals increased by 50 per cent to 21 deals from 14 deals.
When the bourse closed for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units valued at N3.9 billion, followed by Okitipupa Plc with 752.2 million units worth N7.8 billion, and Afriland Properties Plc 297.5 million units sold for N5.3 million.
Also, Aradel Holdings Plc, which is now listed on the Nigerian Exchange (NGX) Limited after its exit from NASD, remained the most active stock by value (year-to-date) with 108.7 million units sold for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 billion.
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