Nigeria to raise 157 bln naira via Treasury bills next week

Nigeria plans to raise 157.05 billion naira ($978.20 million) via treasury bills with maturities of between three months and one year on May 7, the central bank said on Wednesday.
The bank said it would sell 22.05 billion in three-month bills, 30 billion naira of six-month paper and 105 billion naira in one-year bills, using the Dutch auction system.
Results of the auction are expected the following day, the bank said in a statement.

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nigerian naira steady, seen gaining next week

The Nigerian naira was broadly steady against the dollar on the interbank market on Wednesday as dollar liquidity remain sufficient to meet demand by importers and other end-users.
The naira closed at 160.60 to the dollar, little changed from the previous day's close of 160.68.
Traders said demand for the dollar remained weak while inflows from oil companies the previous day kept the market liquid.
"The naira is seen strengthening next week as we are expecting NNPC - the state-owned energy company- to sell dollars and some oil companies are yet to sell dollars in the market for month-end purposes," one dealer said.
Renewed interest in local debt by offshore investors coupled with large dollar sales by energy companies in the last three weeks have provided support for the naira.

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Nigeria's forex reserves rise 0.89 month-on-month to $38.14 billion

CBN Ag. Governor, Alade

Nigeria's foreign exchange reserves rose 0.89 percent month-on-month to $38.14 billion by April 28, from $37.80 billion by March 28, data from the central bank showed on Wednesday.
The forex reserves of Africa's biggest economy however dipped by 21.92 percent year-on-year as they stood at $48.85 billion a year earlier.
Nigeria's forex reserves fell drastically earlier in the year in the wake of U.S Federal Reserve tapering of its economic stimulus package, leading to the exit of offshore investors from the local debt market and rapid depreciation of the local currency.
Renewed interest in the local debt by offshore investors has boosted Africa's top energy producer's forex reserves.

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Kenya central bank holds key lending rate at 8.5 pct

President Kenyatta

Kenya's central bank held its key lending rate at 8.5 percent on Wednesday, saying its monetary policy stance was delivering the desired results, despite inflation ticking upwards in April.
 Below is the full Monetary Policy Committee statement on the decision:
   
   The Monetary Policy Committee met on 30th April, 2014, to review market developments and the outcomes of its previous monetary policy stance. The Committee noted that overall inflation remained within the target range in April 2014 while exchange rate stability had been maintained. It noted the following outcomes in the market since its meeting in March 2014:
   * The overall month-on-month inflation increased slightly from 6.27 percent in March 2014 to 6.41 percent in April 2014 largely reflecting an increase in transport costs. Nevertheless, month-on-month non-food-non-fuel (NFNF) inflation, which measures the impact of monetary policy, declined from 4.98 percent to 4.53 percent during the period. This reflects the fact that the monetary policy stance continues to support a stable inflation rate.  
   * The monetary policy operations adopted coupled with increased foreign exchange inflows through Diaspora remittances supported exchange rate stability. Specifically, the Kenya Shilling to US Dollar exchange rate continued to fluctuate within a narrow range in April 2014. The Central Bank of Kenya (CBK) level of usable foreign exchange reserves increased from USD 6,213 million (equivalent to 4.29 months of import cover) at the end of March 2014 to USD 6,339 million (equivalent to 4.37 months of import cover) at the end of April 2014. The build-up in reserves largely reflected the sale of foreign exchange to CBK by commercial banks.
   * The Government domestic borrowing programme for the Fiscal Year 2013/14 was consistent with the Medium-Term Debt Management Strategy. In addition, the Committee noted that the increased investor appetite for longer-dated domestic debt instruments has continued to lower refinancing risk in the domestic debt profile.  
   * The Central Bank Rate (CBR) coordinated movements in short-term interest rates while the liquidity management operations adopted by the CBK maintained stability in the interbank market.
   * The latest stress tests and data showed that the banking sector remains solvent and resilient. This has continued to enhance the transmission of monetary policy signals to the real sector. The annual growth in private sector credit stood at 22.66 percent in March 2014 compared with 21.46 percent in February 2014. This is an indication of a pickup in domestic economic activity and was supported by the continued integration of the mobile phone financial services and banking platforms. The private sector credit growth is being monitored carefully to ensure that it does not trigger any demand inflation pressure or adverse inflationary expectations. In addition, the ratio of non-performing loans to gross loans decreased from 5.8 percent in February 2014 to 5.6 percent in March 2014 indicating a lowering in credit risk. A combination of declining credit risk and rising private sector growth supports private investment and growth.  
   * The latest data from the KNBS showed that the financial intermediation sector grew by 7.2 percent in 2013 compared with 6.5 percent in 2012. This contributed significantly to the 4.7 percent overall economic growth in 2013.  
   * Confidence in the economy remains strong. Activity at the Nairobi Securities Exchange (NSE) remained buoyant where the NSE-20 index stood at 4,945.78 at the end of March 2014 from 4,933.44 at the end of February 2014. Diaspora remittances, buoyed by the strengthening global economy, rose to their highest level so far, reaching USD 119.59 million in March 2014 compared with USD 110.42 million in February 2014. This has moderated the impact of the temporary reduction in foreign investors' participation at the NSE. In addition, the MPC Market Perception Survey conducted in April 2014 showed that the private sector expects a strong growth in 2014 with inflation and the exchange rate remaining stable for the remainder of 2014.
   On the global scene, the Committee noted that the global economy was projected to grow from an estimated 3.0 percent in 2013 to 3.6 percent in 2014 largely reflecting the continued recovery of advanced economies. Notably, growth in the Eurozone had turned positive partly reflecting a pickup in domestic demand. Similarly, growth in Sub-Saharan Africa was projected to accelerate from 4.9 percent to 5.4 percent in the period.
   This outlook for the global economy is expected to benefit Kenya's exports and support exchange rate stability. In addition, the commitment by the United States to a gradual and measured tapering off of the economic stimulus programme will dampen any volatility in the global currency and financial markets.
   However, the heightened Russia-Ukraine political situation coupled with the persistent instability in the Middle East and North African region remains a threat to the stability of international oil prices and the overall price stability objective.  
    The Committee concluded that the monetary policy measures had continued to deliver the desired price stability. The monetary policy path remains credible despite the slight rise in overall inflation. It therefore decided to retain the CBR at 8.50 percent so as to continue anchoring inflationary expectations and sustain price stability.
   The CBK will continue to monitor the key macroeconomic aggregates and any emergent risks from the external and domestic economies that may impact on price stability.

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Nigerian banks rush for eurobond to boost power sector lending

CBN Ag, Gov, Alade

Nigeria’s drive to overcome a mismatch between demand for electricity and generating capacity is prompting the nation’s lenders to sell dollar bonds to finance power projects.
The government of President Goodluck Jonathan, which sold 15 state-owned power generation and distribution companies last year, is spending $3.5 billion to boost transmission capacity this year in Africa’s most populous nation by 50 percent from 4,000 megawatts, less than a 10th of South Africa’s full capacity. Funds will come from the sales and borrowing as he seeks to alleviate daily blackouts in the country of 170 million people, the continent’s biggest economy.
Nigeria’s banks are tapping Eurobond markets to be in a position to provide financing for projects including power, with Sterling Bank Plc seeking to raise dollars after Zenith Bank, the nation’s second-biggest lender, sold $500 million of five-year notes on April 10. The yield on the security was 6.29 percent yesterday, compared with 5.07 percent in JPMorgan Chase & Co.’s Corporate EMBI Diversified Financial Sector Blended Yield index.
“Nigerian banks will become regular players in the Eurobond market in coming years,” Samir Gadio, an emerging-market strategist at Standard Bank Group Ltd.’s London unit, said in an e-mailed response to questions April 24. “They will need to refinance existing issues before they mature, but also to raise more funding for the financing of power, oil and gas and infrastructure projects.”
Strong Demand
The state’s disposal of its power assets last year attracted about $2.4 billion, with most of the financing arranged by local banks, Wale Shonibare, the managing director of investment banking at Lagos-based UBA Capital Plc, said in a Bloomberg TV Africa interview broadcast April 25.
Demand for Zenith’s bonds was more than double the amount on sale, the Lagos-based lender said in an e-mailed statement on April 17, without saying what the money will be used for. The issuance, arranged by Goldman Sachs Group Inc. and Citigroup Inc., is part of a $1 billion global medium-term note program. Zenith declined to comment beyond the statement.
Sterling Bank plans to sell a Eurobond in 2015 and will also start talks with investors to raise $200 million this year, Chief Financial Officer Abubakar Suleiman said by phone from Lagos on April 24.
“The amount for the Eurobond has not been determined,” he said. “It is intended to help the bank finance growth.”

Zenith Bank chief, Emefiele

‘Lending Spree’
Guaranty Trust Plc, Nigeria’s biggest bank, which raised $400 million in November for oil and gas investments out of a $1 billion bond program, has enough short-term dollar funding, according to Chief Executive Officer Segun Agbaje.
“If we see a long term funding need we’ll have to raise more funds,” he said in an April 9 interview.
Yields on Guaranty’s Eurobonds due November 2018 have dropped 16 basis points to 6.13 percent since they were sold. Fidelity Bank Plc’s $300 million of four-year Eurobonds have climbed 122 basis points to 8.36 percent since being issued last May.
“Nigerian banks don’t have significant excess or idle foreign currency funding partly due to regulations so when the lending opportunities come up, they tend to have to go to the market to raise funds,” Bunmi Asaolu, an analyst at FBN Capital Ltd., said by e-mail on April 15. “The risks are there because of foreign-exchange risk and question marks surrounding transmission and gas supply. This is why some banks have chosen not to participate in the ongoing lending spree.”
Lower Cost
The Central Bank of Nigeria increased cash-reserve requirements on deposits made by government ministries and agencies and state-owned companies to 75 percent from 50 percent last year and told lenders to lower fees and commissions to reduce costs to customers. The regulator raised requirements on private deposits to 15 percent from 12 percent on March 25 to reduce liquidity and support the naira.
“Loan-book growth has become an important objective for domestic banks in their bid to grow earnings,” Adelayo Alabi, an analyst at Lagos-based Greenwich Trust Ltd. said in an e-mailed response to questions, on April 15. “Dollar debt provides a lower-cost of funding than what is obtainable” locally.
Union Bank of Nigeria Plc, which was bailed out by the central bank five years ago during a debt crisis, has been selective with the power deals it funds, Chief Financial Officer Oyinkan Adewale said by phone April 25.
“We have to be very, very careful because we know everybody was rushing to finance power, that was the new kid on the block, but a lot of these assets people didn’t really know the quality of,” Adewale said. “While we have quite a bit of demand coming to us to finance power, we only participated in one or two deals.”
Expansion Plans
Yields on the government’s naira bonds due June 2019 have climbed 24 basis points, or 0.24 percentage point, to 13.25 percent this year. Nigeria’s naira gained 0.1 percent to 160.85 per dollar by 9:56 a.m. in Lagos for a decline this year of 0.3 percent.
“We will see a trickle of other banks coming to the market,” John Bates, a London-based emerging market corporate analyst at PineBridge Investments, which manages $74 billion, said in e-mailed comments on April 16. “One of the challenges for the Nigerian banks is raising long term funds which they can then on-lend to their corporate customers, many of which are hungry for finance.”
Culled from Bloomberg

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Nigerian naira gains on oil firms' dollar sales

Ag CBN Gov, Alade

Nigeria's naira strengthened against the dollar on the interbank market on Tuesday on support from energy companies' dollar sales.
The local currency strengthened to 160.58 per dollar from its 161.08 close the previous day.
Traders said a unit of ExxonMobil sold $70 million to some banks, while Royal Dutch Shell sold an undisclosed amount of dollars.
"Weak demand for the dollar coupled with sales by two energy companies provided support for the naira," one dealer said.
Traders said the naira is seen trading around 160.60-161 in the coming day and expected to gain further next week when state-owned energy company NNPC is expected to sell dollars in the market.

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Europe considers dropping ban on South African orange juice

President Zuma

The European Commission has proposed dropping a ban on South African citrus imports to keep orange juice on Europe's breakfast tables this summer but said it could be re-imposed if shipments contain a fungal disease.
The European Union, which buys 1 billion euros ($1.4 billion) of South African citrus exports every year, banned mainly oranges, lemons, and tangerines from South Africa late last year because of a fungal disease found in shipments.
But in a document obtained by Reuters, the Commission, which coordinates trade policy for the 28-member bloc, says a ban is not necessary. It recommends considering blocking the fruit only if the black spot disease is found in five different shipments from South Africa during the 2014 season.
The document said proper checks and tracking of fruit origin were enough to allow citrus into the EU. "The specified fruits shall be visually inspected by the responsible official body at the point of entry," it said.
EU governments will vote on Wednesday whether to extend the ban, which would block 600,000 tonnes of citrus fruit for the May-October season, potentially inflating the price of orange juice in Europe this summer and forcing South Africa to sell at lower prices elsewhere.
South Africa supplies about a third of the European Union's total citrus imports and is the main source of oranges for the juice drunk by consumers in Britain, Germany and France during Europe's summer.
Last year's ban followed the interception of 35 citrus shipments from South Africa that were contaminated with the fungal black spot disease, which growers in southern Europe fear could take hold in their citrus groves.
While harmless to humans, citrus black spot causes unsightly lesions on the fruit and leaves, reducing both harvest quality and quantity. There is no known cure, but fungicides can be used to control the spread of the disease.
'END OF AN INDUSTRY'
The dispute comes at a sensitive time because the European Union is offering to improve the terms of its free-trade deal with South Africa in return for Pretoria's support for the trade deals that Europe is seeking with sub-Saharan Africa.
EU trade chief Karel De Gucht told South African officials during a visit to Johannesburg in November that the contaminated shipments were "serious and problematic".
South African growers say banning their citrus produce from all the European Union's countries is unfair because there are no citrus groves in northern Europe due to the colder climate, meaning there was no risk from the black spot fungal disease in places such as Britain and Germany.
"It's what we'd term an industry-ending event should we be banned out of Europe," Justin Chadwick, head of the Citrus Grower's Association of Southern Africa, told South African media earlier this year.
The EU's ban last year was largely symbolic because it came at the end of South Africa's season. But the European Union's food safety watchdog said in February there was a risk of the fungal disease taking hold in Europe's estimated 500,000 hectares of citrus groves.
EU farm union Copa-Cogeca wrote to EU Health Commissioner Tonio Borg this month to call for an immediate ban from any South African farms found to be contaminated with the black spot disease. Citrus-producing Spain, Italy and Greece support such a measure but face resistance from northern European nations.
"We want measures for 2014," the group's head Pekka Pesonen said. "We faced a very high risk of contamination last season and we cannot repeat it this year."

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Kenya delays 2014 growth forecast after 2013 disappoints

President Kenyatta

Kenya has delayed the release of its official economic growth forecast for this year by more than a month after saying on Tuesday that the economy grew less in 2013 than expected.
East Africa's largest economy grew by 4.7 percent last year, a slight acceleration from 2012's 4.6 percent figure but less than the government's projection of just above 5 percent after low rainfall curbed production in the key agricultural sector.
The government had been expected to give its forecast for 2014 growth on Tuesday but Cabinet Secretary for Planning Anne Waiguru told reporters the release had been delayed.
"We will have it (2014 forecast) in the budget strategy paper, the one that is going to precede the national budget, she said. "We need to make a few consultations with the national Treasury before we give the forecast."
The finance minister is scheduled to present the national budget to parliament in mid-June. The Treasury said in January it expected the economy to grow by 5.8 percent this year.
Analysts said deferring the growth estimate would buy the authorities time to assess the effects of a drop last year in tea prices and sluggish tourist arrivals.
Gun and grenade attacks blamed on al Shabaab rebels in neighbouring Somalia, including September's attack on the Westgate shopping mall in Nairobi, in which at least 67 people were killed, may also have an economic impact.
"There are several factors that were negative last year and they are up in the air," said Robert Shaw, a Nairobi-based economic analyst.
"It was quite wise not to make a projection at this stage because we certainly need a little more time to see how those factors continue."
Waiguru said the disappointing 2013 performance was driven by slower growth in the agricultural sector, which accounts for a quarter of the economy, due to inadequate rainfall in some parts of Kenya.
The sector grew 2.9 percent in 2013 compared with revised growth of 4.2 percent in the year before, with output of coffee and maize dropping 20 percent and 2 percent respectively.
The minister also said high lending rates for businesses and households had dragged on overall economic performance in 2013.
Razia Khan, head of research for Africa at Standard Chartered, said slower spending by the government after an election in March could have also weighed on growth last year.
"This will be a key factor in Kenya registering a positive surprise when its budget numbers are published," Khan said.
"Slower-than-expected spending will see the fiscal deficit narrow, relative to initial projections of -7.9 percent of GDP."
Total exports declined 3 percent from the previous year, causing the trade balance to worsen, Waiguru said.
Kenya's balance of payments surplus declined to 74 billion shillings ($852.04 million) from 123 billion shillings in 2012.
Waiguru said the economy had been stable in the first quarter of 2014, however, a trend that was likely to be maintained for the rest of the year.
Commercial lending rates have been falling in an orderly manner in recent months while inflation and the exchange rates have been broadly stable.
"If there is one area that this government can be complimented on, it is the relatively stable - one could almost say solid - macroeconomic framework," Shaw said.
"It is quite a nice change from before where all sorts of factors kicked in and it was all very turbulent."

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Bharti Airtel profit surges on India mobile market recovery

Airtel symbol

Bharti Airtel Ltd, India's top mobile phone carrier, reported a surge in quarterly profit, in line with expectations, as reduced competition in the world's second-biggest mobile phone market helped push call prices higher.
Consolidated net profit surged 89 percent to 9.62 billion rupees ($158.9 million) for its fiscal fourth quarter to end-March, New Delhi-based Bharti Airtel said on Tuesday.
The figure compared with analysts' consensus estimate of 9.73 billion rupees.
Prospects for Indian telecommunications companies, which had been hurt by fierce competition and a vicious price war, started improving last year following a court order that revoked the permits of several carriers.
After reporting declining quarterly profit for four years, Bharti Airtel posted a profit rise for the December quarter, helped by higher call prices and a surge in mobile data sales.
Voice services still account for close to 85 percent of Indian mobile revenues, but high-margin data services are growing much faster.
Bharti and its two closest rivals, Vodafone Group Plc's local unit and Idea Cellular Ltd, have become stronger in the past year and now account for about 70 percent of the sector's overall revenue.
The three carriers spent a total of $8 billion in an airwave auction this year to buy the majority of the spectrum on offer, fend off competition and expand their mobile data businesses.
The entry of cash-rich conglomerate Reliance Industries  into the telecoms market is now the biggest risk for the three top companies.
Bharti Airtel's African business has been a drag on the company, which has to yet to turn a profit there four years after spending $9 billion to acquire money-losing mobile phone assets.
Losses in its international business, which includes the African operation, more than doubled to 12.18 billion rupees before exceptional items.
Bharti Airtel operates in 20 countries across Asia and Africa and is the world's fourth-biggest cellular carrier by customers.
Bharti said performance in Africa was hurt by a "seasonal downturn" in parts of the continent and regulatory intervention in Nigeria, its biggest African market.
Total revenue for Bharti Airtel, headed by Indian billionaire Sunil Mittal and nearly a third-owned by Singapore Telecommunications Ltd, rose 13.5 percent from the year-earlier quarter to 222.19 billion rupees, lagging estimates of 224.45 billion rupees.
Monthly average revenue per user (ARPU) from its Indian operations, a key metric for phone carriers, rose 1 percent to 196 rupees for the quarter compared with the previous quarter. In Africa, ARPU fell 5 percent from the previous quarter to $5.50.
The results were unveiled after the close of the Mumbai market. Bharti Airtel shares had fallen 0.8 percent on Tuesday, in line with the benchmark index.

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Nigerian lending rates flat on ample liquidity

Nigerian interbank lending rates held steady for the fifth week in a row on Friday at an average of 10.5 percent, reflecting increased liquidity in the banking system.

Dealers said payments to government agencies and cash from maturing treasury bills had boosted market liquidity.

The cash balance that lenders hold at the central bank opened at a surplus of 767 billion naira on Friday, up from 278 billion naira last week.

The secured Open Buy Back was unchanged for the fifth consecutive week at 10.25 percent, 1.75 percentage points below the central bank's benchmark rate of 12 percent.

Overnight placement and call money were also unchanged at 10.5 percent and 10.75 percent respectively.

The cost of funds in the interbank market should remain stable around the same level next week, dealers said, unless the central bank embarks sells treasury bills to reduce liquidity in the banking system.

"We don't expect any major change in interest rates next week due to the level of liquidity," one dealer said. 

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Nigeria's treasury auction 4-1/2 times oversubscribed

Kakawa Discount House chief, Jaiyeola

A Nigerian short-term debt sale was 4-1/2 times oversubscribed by local pension funds and foreign investors on Wednesday, driving yields down across maturities, dealers said.
Nigeria received 680.14 billion naira ($4.21 billion) in subscriptions for Treasury bills ranging from 3-month to one-year maturities. It had aimed to raise 150.61 billion naira ($932 million) and the heavy demand pushed yields down more than 0.70 percentage point across the board, dealers said.
Offshore funds have renewed their appetite for Nigerian assets, dealers say, after the West African country rebased its gross domestic product (GDP), overtaking South Africa as the continent's biggest economy and making it a more attractive destination for investors.
Demand for the debt helped the naira currency firm 0.34 percent against the dollar on Wednesday.
The central bank sold 34.88 billion naira worth of 91-day bills at 11 percent, lower than the 11.71 percent at the previous auction earlier in April.
It sold 30 billion naira in the 180-day notes at 11.77 percent, 1.07 percentage point below the yield it paid at the last auction, while the one-year paper fetched 12.24 percent, against 13.04 percent at the previous sale.

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Nigeria to export around 1.8 mln bpd of crude in June

Petroleum minister, Madueke

Nigeria is to export around 1.8 million barrels per day of crude oil in June, compared to an initially planned 1.53 million bpd in May, data from trade sources showed on Wednesday.
The slight recovery in export levels is largely due to a return to near full production of the Forcados grade of crude oil.
Flows of the grade were disrupted by a leak in a pipeline, which operator Shell said it is repairing. The grade remains under force majeure, Shell said on Wednesday.
In June, shipping lists showed there will be six cargoes of Forcados exported, roughly in line with recent months where there was no disruption.
The total exported in May will be above the originally planned 1.53 million bpd as some Forcados cargoes that were due for export in April were pushed back a month due to a leak in a pipeline.
A trader said that there would be around two new cargoes of Forcados grade crude oil exported in May, while the remaining three would be pushed back from April.
This would have put the exports for the month excluding deferrals at about 1.65 million bpd, still far below average.

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