Macroeconomic update of week of 18th June 2018.   

22 June 2018 ( Lagos )

Global Economy

The BOE held its benchmark rate steady at 0.5%, though its body language now tilts towards monetary tightening as three of the policy committee members voted for a 25bps hike. Elsewhere, as widely expected, Japan’s core consumer index for May remained unchanged from April at 0.7% YoY. On the energy font, member states of OPEC reached an agreement to increase its output by reducing its compliance level from 152% in May to 100%. Based on analyst’s analysis, this is expected to bring an additional 700kbpd supply, as not all OPEC have spare capacity to raise production.

Domestic Economy

This week, the DMO released Nigeria’s debt stock for the first quarter of 2018. From the breakdown provided, FG’s public debt expanded by 5.3% QoQ to N19.3 trillion in the period, reflecting a 17% QoQ expansion in external debt to $22 billion (N6.7 trillion) even as domestic debt declined by 0.1% QoQ to N12.6 trillion. The increase was largely due to the $2.5 billion Eurobond issued in the period. Elsewhere, total debt service printed at N713 billion (+39% YoY) with domestic debt service and external debt service expanding 36% YoY and 76% YoY to N643 billion and $225 million respectively. Recent data (Credit conditions survey re- port for Q2 2018) on Nigeria’s credit position shows credit supply to household expanded in Q2 18 on the back of increased liquidity position in the economy.


The Nigerian equity market ended the week negative, losing 2.74% over the week with YTD performance back in the red (-1.0%). The negative run was driven by losses in bellwether stocks: Seplat (-9.26%), Dangcem (-5.86%), GTB (-1.93%) and Zenith (-1.89%). On a sectorial basis, the Personal care, Cement, Oil & gas, and Banks led the decliners.

Fixed Income

Average yields in the Nigerian fixed income market rose 26bps WoW to 13.22% as liquidity strain and selloffs at the long end drove uptick at both ends of the curve. For context, average Treasury bill yields rose 36bps WoW to 12.9% WoW following strain on market liquidity by CBN’s OMO issuance worth N137.4 bil- lion split across the 219 and 93 day papers and FG’s net repayment of N26.7 billion at this week’s NTB auction. Also, at the long end following selloffs across vary- ing long dated instruments average bond yields jumped 15bps WoW to 13.54%.

Source: ARM Securities Limited

Reporting for EasyKobo on 22 June 2018, Friday in Lagos , Nigeria

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