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Economy

T-Bills Yields Drop to 12.35% on FAAC Inflows

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T-bills yields

By Dipo Olowookere

The treasury bills market was bullish on Monday ahead of the primary market auction to be conducted by the Central Bank of Nigeria (CBN) on Wednesday (today).

Business Post reports that the average T-bills yields depreciated at the close of the day’s trades by 1.75 percent to settle at 12.35 percent as inflows from FAAC payments significantly strengthened system liquidity.

It was observed that during trading yesterday, there were huge interests on the Jan – March maturities.

As a result, the 1-month, 3-month, 6-month and 9-month notes recorded yield declines of 0.56 percent, 7.91 percent, 0.13 percent and 0.36 percent respectively, with the yield on the 12-month paper appreciating by 0.20 percent at the close of transactions on Tuesday.

However, the market is expected to trade on a relatively calmer note in today’s session as market players position for the NTB auction, where the CBN intends to rollover a total of N145 billion in NTB maturities.

“Rates are expected to clear considerably higher, especially on the 364-day due to the double hike in OMO stop rates from the last NTB auction,” analysts at Zedcrest Research said.

Meanwhile, in line with expectations, the average money market rate declined yesterday to 9.92 percent.

This was as the Open Buy Back (OBB) and Overnight (OVN) rates decreased by 5.33 percent and 5.17 percent respectively to finish at 9.50 percent and 10.33 percent accordingly.

This came on the back of inflows from FAAC payments of about N382 billion, which was estimated to have bolstered system liquidity to N490 billion from N110 billion opening on Tuesday.

The rates are anticipated to remain relatively stable today as there are no significant outflows expected.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

DMO Increases Coupon Rates of 10-year, 20-year, 30-year Bonds

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Coupon Rates

By Ashemiriogwa Emmanuel

The coupon rates of the three bonds offered for sale by the Debt Management Office (DMO) at the last primary market auction (PMA), Wednesday, October 20, 2021, was raised, Business Post reports.

High net-worth individuals (HNIs) and institutional investors who participated in the exercise got more than they might have bargained for as the debt office hopes to keep the demand for the investment tool high.

Before the bond sale, the DMO had said it planned to auction N150 billion worth of the papers in three maturities of 10 years, 20 years and 30 years, all re-opening, at N50 billion each.

However, investors showed significant interest in two of the notes, staking N49.05 billion on the 10-year paper, N80.92 billion on the 20-year note and N120.74 billion on the 30-year bond.

From the analysis of the bond sales, investors offered N250.71 billion on the N150 billion brought to the market, representing 67.14 per cent of over-subscription.

A further breakdown showed that the 12.98% FGN MAR 2050 note was oversubscribed by 141.5 per cent, the 16.2499% FGN APR 2037 paper was oversubscribed by 61.8 per cent and the 12.50% FGN JAN 2026 was under-subscribed by 1.9 per cent.

It was gathered that the debt office allotted N44.80 billion worth of the 10-year note to 36 successful bids at 11.65 per cent, higher than 11.60 per cent at the last exercise, which was a month ago. A total of 44 bids were received for this tenor with the range of bids between 10.50 per cent and 13.00 per cent.

As for the 20-year bond, it allotted N52.72 billion to 61 investors from the 96 offers it received and the coupon rate cleared at 12.95 per cent, higher than the 12.75 per cent of the preceding sale. The range of bids for this maturity was between 12.00 per cent and 14.00 per cent.

A look at the allotment for the 30-year paper showed that the DMO sold N95.24 billion to 54 investors from the 79 bids it received and this cleared at 13.20 per cent compared with the previous 13.00 per cent and the range of bids was from 12.70 per cent to 13.99 per cent.

It can be deduced that during the exercise, the debt office sold a total of N197.76 billion of the FGN bonds to investors, higher than the N150.00 billion it initially wanted to sell.

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Economy

Stakeholders Pledge Quality Market for Locally Produced Onion Species

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onions at Lagos Markets

By Adedapo Adesanya

National Onion Producers, Processors and Marketers Association of Nigeria (NOPPMAN) has pledged to stimulate quality production and profitable market for all the commodity stakeholders in West Africa.

This was disclosed by the President of the association, Mr Aliyu Maitasamu in Abuja, who further said the group was ready to build members’ capacities in good agronomic practices for onion production and good strategies for commercialisation.

Mr Maitasamu said that the onion species produced in the country was one of the best in the world because of its strong pungency, adding that it is exported to many countries including France, Japan, India, Niger Republic, Ghana and others.

He said as part of efforts to bring stakeholders together in West Africa to further harness the potential of the onion business, the association plans a regional conference on the impact of the African Continental Free Trade Area (AfCFTA) on onions in November.

Mr Maitasamu said that the regional conference and their General Annual Meeting 2021 will hold on November 3 and 4, in Kano State, urging interested participants to register through https://noppman.org.

He said the theme of the conference is The Onion Sector in the Era of the African Free Trade Area and the COVID-19 Pandemic: Challenges and Opportunities.

Mr Maitasamu added that the conference is a collaborative effort of the Regional Observatory for Onion Sector in West and Central Africa (ROO-WCA), explaining that the overall objective is to re-structure efficiently the onion sector in the region in order to ensure a better exchange of onion between areas of production and consumption.

“More specifically, ROO/WCA is targeting to build an integrated, strong and effective onion value-chain that will be able to ensure and stimulate a quality production and profitable market for all the commodity stakeholders.

“The ROO-WCA mission expands also into reinforcing institutional capacities of professional organizations, with the objective to ensure smooth exchange between partners by collection.

“And dispersal of commercial information relevant for decision-makers in production, purchases and sales.

“This will ensure permanent contact between members by organising periodic meetings, for a better use of business opportunities and judicious sharing of information and experience,” he said.

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Economy

Crude Prices to Average $74 Per Barrel in 2022—World Bank

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crude oil prices

By Adedapo Adesanya

The World Bank in its latest Commodity Markets Outlook says crude prices will average $74 per barrel next year.

Crude oil prices (an average of Brent, WTI and Dubai) are expected to average $70 in 2021, an increase of 70 per cent and are projected to be $74 a barrel in 2022 as oil demand strengthens and reaches pre-pandemic levels.

The use of crude oil as a substitute for natural gas presents a major upside risk to the demand outlook, although higher energy prices may start to weigh on global growth.

This is happening as energy prices soared in the third quarter of 2021 and are expected to remain elevated in 2022.

The Bretton Wood institution said that the rise is adding to global inflationary pressures and could shift economic growth to energy-exporting countries from energy-importing ones.

The report said that energy prices—expected to average more than 80 per cent higher in 2021 compared to last year—will remain at high levels in 2022 but will start to decline in the second half of the year as supply constraints ease.

Non-energy prices, including agriculture and metals, are projected to decrease in 2022, following strong gains this year.

“The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries,” said Mr Ayhan Kose, Chief Economist and Director of the World Bank’s Prospects Group, which produces the Outlook report.

“The sharp rebound in commodity prices is turning out to be more pronounced than previously projected. Recent volatility in prices may complicate policy choices as countries recover from last year’s global recession,” he added.

In 2021, some commodity prices rose to or exceeded levels not seen since the spike of 2011.

For example, natural gas and coal prices reached record highs amid supply constraints and rebounding demand for electricity, although they are expected to decline in 2022 as demand eases and supply improves.

However, additional price spikes may occur in the near term amid very low inventories and persistent supply bottlenecks.

As global growth softens and supply disruptions are resolved, metal prices are forecast to fall 5 per cent in 2022, after rising by an estimated 48 per cent in 2021.

Following a projected 22 per cent increase in 2021, agricultural prices are expected to decline modestly next year as supply conditions improve and energy prices stabilize.

“High natural gas and coal prices are impacting the production of other commodities and pose an upside risk to price forecasts,” said Mr John Baffes, Senior Economist in the World Bank’s Prospects Group.

“Fertilizer production has been curtailed by higher natural gas and coal prices, and higher fertilizer prices have been pushing up input costs for key food crops. The production of some metals such as aluminium and zinc has been reduced due to high energy costs as well.”

The institution then called on countries to benefit from accelerating the installation of renewable energy and reducing their dependency on fossil fuels.

The report notes that forecasts are subject to substantial risks—including adverse weather, the uneven COVID-19 recovery, the threat of more outbreaks, supply-chain disruptions, and environmental policies.

Furthermore, higher food prices, along with the recent spike in energy costs, are pushing food-price inflation up and raising food-security concerns in several developing economies, it warned.

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