FOREX Market hit on Cripple Tricycle Assembly Plants

DIFFICULTY to accessing foreign exchange to bring in Completely Knocked Down (CKD)parts have started crippling tricycle and motorcycle assembling plants in the country with spillover effects on outsourcing companies that supply labour to the industry.

 

A reference point is Dag Motorcycles Industries Nigeria Limited, the assemblers of Bajaj tricycles and motorcycles.

Ademuyiwa Abe , the company’s Secretary/Legal Services, said the firm has been forced to cut down its 1,000 per day production capacity by 40 percent and terminated the services of Ashton Consulting Ltd, who supply the labour, until the situation improves.

According to him, the forecast for the Nigerian economy for 2016 is not looking too good, hence, we were forced to cut back on some of our operations.

Nigeria raises N45bn in 5-20year bond

Nigeria sold 45 billion naira worth of naira-denominated bonds maturing in 2020 and 2034 at an auction on Wednesday, paying higher yields than at its previous auction in August, the Debt Management Office said on Thursday.

 

The amount raised at the auction was short of the 70 billion naira initially proposed by the debt office. Traders said the debt office was constrained by the higher yields that investors demanded and reduced the amount of debt sold.

Investors had asked for yields ranging from 13.5 to 20 percent for the 2020 bond and 14.5 to 20 percent for the 2034 debt, but the debt office decided to cut off the sale at 15.95 and 15.97 percent respectively.

The debt office sold 20 billion naira worth of 2020 debt at 15.95 percent yields, 57 basis points more than 15.38 percent at the last auction in Aug.

Nigeria Financial markets suffer after JP Morgan index expulsion

Nigeria’s stocks sunk on Wednesday after JP Morgan said it would eject Africa’s biggest economy from its influential emerging markets bond index due to tough controls imposed to prevent a currency collapse.

In a move that came earlier in the year than expected, JP Morgan said late on Tuesday it would remove the bond listings belonging to the West African nation by the end of October, forcing fund managers to sell Nigerian bonds, which might raise the country’s borrowing costs.

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The decision is a blow to President Muhammadu Buhari, who has promised to diversify an oil-dependent economy hit by a slump in global crude prices but who faces criticism for not having appointed a cabinet since his inauguration on May 29.

With no finance minister in place, foreign investors have been left wondering about government policies and struggling to sell shares or bonds as the central bank adopted tough currency restrictions to halt a slide of the naira.

Anders Faergemann, senior sovereign portfolio manager at PineBridge Investments, said he was surprised that Buhari had not started tackling the country’s economic problems more than three months into his tenure.

“As an investor it is flabbergasting that the Nigerian authorities have allowed themselves to be put in this situation,” he said.

All Nigerian stocks listed in the MSCI frontier market index fell by more than 3 percent, while bond yields spiked across maturities.

While many foreign bonds investors have exited the market since JP Morgan warned Nigeria in January and again in June that it would get kicked out of the index unless conditions improved, stocks investors were now also pondering whether to stay.

Naira on watch ward to stableon CBN’s Dollar sales to BDCs

The naira is expected to remain relatively stable in the parallel market this week due to the Central Bank of Nigeria’s (CBN) regular dollar sales to the BDC segment and the interbank markets, according to analysts at Afrinvest Securities Limited and Cowry Asset Management Limited.

Last week, the naira traded flat at the interbank market (N199.10/$1), while the CBN maintained its intervention rate at N197/$1. In the parallel market, the naira improved to N211/$1 on Wednesday, from N211/$1.