₦airaland Forum

TransAtlanticEx:
Leave him to continue fooling himself,making reference to 2016.
2016 was different,both problems to oil were temporar(militancy especially and price wars).
The moment osibanjo visited ND and probably hand out envelops,militancy stopped.
But today we are looking at a global dwindling demand for oil,so I wonder why any rational human will liken 2016 to today.
Production cuts and oil at $45 is not enough to defend naira appropriately.
Come monday,CBN will inject stipends in the name of intervention that won't be enough and the market will absorb it almost immediately and rates will turn again.
These aren't favourable times,well anything can happen.
But in today's

If 2016 was better as you think and naira went from 199 to 526. Don't you think it should have gone from 360 in 2020 to at least 952?

Start buying dollars at 450, you'll run out of naira before the CBN even spends 10% of its reserves. Just start and see.

einsteine:
You are wrong.

I am not going to belabor the point. If you think lowering interest rates (which would lead to increased loan books on the part of banks) leads to a decrease in Naira supply, then I have nothing further to say.

And on the part of the dollar/Naira issue, if you think 380 is the fair value for the dollar, I am willing to offer you as much naira as you want for as much dollar as you can supply at that price.

Dot just say you're wrong and stop. Argue with facts.

First, who told you that lowering interest rates lead to increased loan book for banks?
Where have you been? haven't you been reading about CRR debits? So if the banks were growing their loan books just enough to reach 65% would there have been as much CRR debits?

I will educate you a little on the naira supply situation currently. Perhaps there'd be others that will learn from it.

You may read a headline saying "bank loanyo the private sector increased by 3.5trn in 2019" but to really get the effect on the impact on naira supply, what you need to consider are :1. the net increase to the domestic Economy:If they increased by 3.5trn to the private sector and reduce by 2.5 trn to the government due to their restricted participation in government securities, then the net credit to the domestic Economy has only grown by 1 trn.

2. The average lending rate: You should know the low yield market has forced banks to also reduced their lending rates to stay competitive. Already most borrowers are paying 1% less in interest since most loans are priced in reference to the MPR, and it's been adjusted by 100bps. Also, how would a bank expect FLOUR MILLS for instance to take facilities at 20%, when. they can easily raise commercial papers at 7% or less because of the low yield market. The result is that banks have generally had to reduce their lending rates by at least 400bps

Now 22trn to the economy at an average rate of 22% pa creates 4.84trn in new naira supply.

But today at a higher amount of even 24trn, the lower pricing of 18% on bank facilities mean that only 4.32trn is created.

3. The third thing you should consider is the impairment charge. How much of the new naira created via interest on loans dissappear via impairments? the expectation is that higher credit-with more going to the private sector rather than the government-exposes banks to more impairment possibilities.

Read carefully and understand.

einsteine:
And you conveniently skipped the issue of subsidisation of currency rates. The market has shown that people don't mind buying dollars at prices as high as 480 yet your CBN is selling it at much lower rates than that for such things as personal travel and pilgrimage (let's even forget about those who will get at cheap CBN rates and sell at the correct rates).

Any serious person knows who loses in this arrangement. If the CBN should make mistakes and offer dollars at prices cheaper than fair value, then people would swap it up and the prices would go back up. No matter of enthusiastic whining on your part can change that.

You really need to humble yourself to learn.

In a country where the vast majority live on low income with minimum wage at just 30,000. In your own funny reasoning, it's better CBN sells dollars at 480 than at 360 shey?

So when FMN is buying durum wheat at $500 dollars a tonne from the international market, in your funny mind, it better the landing cost is 240,000 per tonne instead of 180,000? Who do you think will suffer it?
The average woman struggling to buy bread loaves at 200 and 10 noodles at 500 will now have to pay 300 for the same loaf and 700 for the noodles and that's what makes sense to you. when her kids start going hungry because Mama's income can no longer buy as much food as before, you think that's when the CBN would have helped them?

You don't just have to argue for the sake of it.

Exchange rate stability is a means to price stability and that's one of the things a monetary authority can do to help citizens cope better with low/stagnating incomes.

Cyberknight:
Nigeria is like a wounded whale in the water giving off blood from its wounds - the sharks smell it and will always come back, no matter how you try to drive them away.

If speculators rush and buy more at 386, shey they will also create another pandemic that will cut global demand for oil and crash prices terribly. cos without that, they will wait for long, as they did since 2017.

If you're honest with yourself, would you not realize that without the virus, oil would have stayed above $50 dollars for most of 2020, the airports would not have been closed, and BDCs would have still been funded?

Now we're in an exceptional situation, a d some people are having funny arguments.

If you're sure, start loading up dollars at 450 now, let's see how it goes.

[quote author=TotoNaRubber post=93445394][/quote]You really think $36bn in reserves is not enough to meet $5bn FPIs?

Like I said, the issue is not about having enough, they're just not the priority for now. Let them wait. We'd rather pay them from future receipts. Afterall, they came and enjoyed 13-17% yields.

chigo4u:
You were silent when dollar rose from 360 to 470 after all your statements previously that dollar would crash latest this year and all of and sudden comes back to start making noise again because of cbn memo.
Even if the dollar crashes back to 386, speculators will still rush and buy more and the cycle continues. Whether you believe it or not the cbn will keep devaluing until the pressure on dollar reduces significantly.

Quote one if such statements when I said dollar would crash latest this year.

What did you expect me to say when dollar went from 360 to 470. Given the situation at the time it was expected. The only thing to say is that 360 to just 470 or even 480 amid a crisis that has affected the whole world is way better than the 180 to 520 we had in 2016.

A simple objective reasoning is all you need to be convinced of that.

einsteine:
Your last paragraph is that a serious question?

Yes it is. I'd really like to know.

The CBN bans dorm accounts, someone is saying offshore banks, I buy my $100 or $12000 per week from aboki, how do I get it to them for deposits.

einsteine:
So the capital controls are not obstacles?

Investors brought in both FDI and PI and exchanged their Forex at official rates and got a CCI in return with a guarantee that they would be allowed to repatriate profits at official rates and the CBN reneges on that and you say there are no obstacles?

The CBN subsidizes certain goods up to and including such useless things as pilgrimages and you say that's no obstacle to free trade?

Your problem is not just a lack of understanding of macroeconomics but a belief in Economic Nationalism which is sad really.

We would see in the near future if the foreign reserve would'nt be depleted by the bad economic managers of the nation

You wrote too much for just one point. The only "obstacle" you pointed out is about currency reparation.

First, it'll be flawed if your reasoning is that in a time of limited forex resources, the CBN's priority above the domestic economy is briesfcase hot monies (FPIs in case you're confused about that).

Nobody forced them to come, and they didn't come to give the money for free. They were earning 13-17%. They were aware of the potential repartriation risk, and they had the forwards market to hedge with.

They want to spend as little NGN as possible to get their USD, that's why they're waiting on the CBN. But obviously, unlike you expect, the CBN will not priotize their demand above that of the local economy, so they have to wait. Even school fees and medicals are probably treated with more priority as they should. It's only in your reasoning that proceeds of Nigerian oil should be used to settle foreigners, with Nigerians' needs ignored. Most of us think it should be Nigerians' first, and that's what the CBN is doing.

And as for FDIs, the expectation already is that they shouldn't be in as much of a hurry to run away with their money. Plus for the past three years, we've been supplying them enough to repartriate with. If they won't be patient. Dollar is available at 470. But I guess they know better than you, and would rather wait to but at 380.

So what other "obstacle" can you mention?

einsteine:
You are obviously unfamiliar with speculative attacks on currencies. If the UK, Switzerland, Thailand and Indonesia could not survive speculators attacking their currency, is it Nigeria with a mono-product economy that would survive it?

Why are you asking a question that's had an obvious answer now? It's like asking a mother of 3, "if xyz can't have a baby, is it you that will now have one?" Open your eyes! She has three already.

Why couldn't speculators keep USD at 520 or even 400 from 2017? Your folks were confidently buying at 520 expecting to sell at 1000, for years they couldn't even sell at 400, you're asking if Nigeria survived it. Shouldn't you know your question is misdirected? Because the real question is can the speculators survive?

I've you're so confident start buying dollars tomorrow at 470, let's see where it lands you.

einsteine:
Sorry but your first paragraph is absolute nonsense. How does a low interest environment limit Naira supply? Please think it through.

There is a lot of reaching for yield by investors (including an engagement in speculation of various sorts) and this is primarily caused by the low risk free interest rate. For clarity, Naira supply increases in low interest environment.

Unless T-bill yields increase sharply, Crude Oil revenue increases and the CBN eases on its capital control, then any intervention by the CBN is ultimately fruitless and would simply allow speculators who have the wherewithal to play the game make undeserved profits at the expense of the national treasury.

You should rather say you're ignorant, and you shouldn't be proud about it.

You only need basic school maths to understand that. If there's N10trn in investable funds, and yields are at 20% pa, the yield market would create N2trn in fresh naira supply . To help you comprehend better, buying 10trn worth if Bonds, t-bills, CPs, and OMOs at 20% yield, investors get N2trn as interest, taking the naira supply to N12trn.

On the other hand, in a 4% yield market, the same 10trn only creates 400bn in interest earnings, taking the naira supply to just 10.4trn.

I guess you're confusing SUPPLY with LIQUIDITY.

In this low yield market, what we've had is excess liquidity as investors are short of investment outlets. But Supply growth has been much slower. Even when you factor in the stimulus funds from the CBN.


Except you can explain how-according to your ignorant assertion-naira SUPPLY,(not liquidity) increases in a low yield environment, you'll have to admit that you're the one talking nonsense, and learn to polish off your ignorance.

How much do you think it was costing the CBN to manage liquidity via OMO.

You know not enough, you'll be quick to be calling something nonsense!

Philantropists:
Inciting fear by the CBN worked in 2016 when there were less troubles, unfortunately 2020 has genuine troubles shortage in oil price revenue, covid19, us china trade war.

No policy the CBN implements now will crash the price of dollar, if the CBN inject the 32 billion usd reserve into the black market now, it will be mopped up by businesses in less than 24 hours and i'm sure they won't dare such. Injecting funds to the black market can better be managed, if the CBN keep injecting $200m at the blackmarket every week, it will take three years to empty the reserve to ground zero, surely they won't inject that much too. The best options is to increase home made productivity, have better home made hospitals, schools, medical insurance, food production then remove forex expenditures like FORM M, PTA, BTA etc. Nothing extraordinary will come next week, just anticipation that magic will happen, there is no magic will real economics.

Bros, say what you know now!

You're saying oil at $30 in 2016, production at under 1.2m bopd due to millitancy, reserves at just $23bn with backlog of $4bn parallel rate at 526 vs official 199.

Are you saying that was better than now with oil at $45 production at 1.4mbopd, reserves at near $36bn and parallel 470 vs official 380?

How much is $32bn? about 13trn. Where are your boys going to get enough naira to mop even 10% of that in weeks talk less of mopping it all in 24 hours. You talk as if it's air they'll use to buy the dollars. Ask your own self. If you're offered dollars at 380 tomorrow. be honest to yourself, can you raise liquidity tomorrow to even buy up to $1m?

TransAtlanticEx:
Them first say 31st oga,go check.
Them come change mouth to 7th now
Can you imagine,a whole central bank of a country not sure about dates,untop chikini $50mln them want release
The way boys dey wait to mop up that their chicken change and hike the price again ehn...
We all know they can't continue with the intervention and want to use scare tactics to defeat boys,even abokis have realised and pay no attention to their tomfoolery.
If they do,their reserve go finish.

Those boys wen dey wait, they have unlimited naira supply? if you dey wait with 90m and rush buy to $200k at 450, what else can you do when price crash go 420. You're out of liquidity. Na to dey hope say CBN will run out, it won't happen!

pluto09:
Yes, I expect the price to drop and then go back up again.
One has to be on top of his game as a speculator.
The CBN does not have enough dollar to meet all the demands, they are just trying to manage a delicate situation and in all honesty I can't blame Meffy.

There's more than enough dollars to meet genuine FX obligations. And there will be for much longer time to come.

einsteine:
Putting obstacles to free markets would always lead to undesirable consequences, in our case, the depletion of the foreign reserve, economic uncertainty and eventually Investor apathy

What obstacles is the CBN putting in the case of Nigeria? None absolutely.

If as a prominent person in my community, I say that youths who have financial issues should come to me and I would give them interest-free loans. But I mentioned some things my loans couldn't be used for to include bet 9ja shops and beer parlors. Would it make any sense for any youth in such a community to say I am putting obstacles on his way to starting a business?

The CBN is not saying you shouldn't import private jet or toothpicks or whatever, it's just you would have to get your forex for such imports elsewhere. What's the obstacle in that? Or it makes sense to you for the CBN to give you $200m of scarce FX to import a jet for you and your family alone, and then be unable to meet up with a $20m demand by a pharmaceutical that will produce drugs for the benefits of millions of citizens.

We should only read theories in the context of their applicability/relevance to our peculiar situation.

einsteine:
The price would drop then go back again.

The CBN position is not backed by fundamentals. They can't keep up with the demand in the long term. People are waiting with billions (just like you waiting for it at 400) to snap at any cheap dollars.

At the end of the day, the foreign reserve will be depleted. It is a bazaar for speculators and currency hustlers.

You're on your own. You've forgotten that between the CBN and speculators, none controls dollar supply but one does naira supply. Or you think the naira is in endless supply to speculators? If the CBN decides to limit money supply to the system as they are currently doing with this ultra low yield market, where will speculators get enough naira to buy dollars at funny prices?

If as a speculator, you only had 100m naira.

Wouldn't you certainly have to choose between buying 250k dollars at 400 (limiting the price) and buying just 100k dollars at 1000 (limiting the demand)?

So since your naira supply is also limited you won't be able to make high dollar demand at a high price. This is something we've seen before.

einsteine:
Companies are borrowing in dollars everyday. I have read quite a few Credit Approval Memos where the currency was dollars. Also, many loans these days are hedged. That's why there is a forwards market. Besides, you don't make money without a little risk.

And there's no problem even if the dollars lie idle. Those dollars could as well be offshore. They are not the entitlement of the Nigerian government.

.

Most dollar loans are to Oil and gas companies who have oil proceeds in dollars.
They are not entirely funded with customer FX deposits as banks have other forms of FX liabilities such as Eurobonds. They also get FX as they trade naira for FX with IMTOs and exporters.

Before LDR banks like GTBANK and ZENITH had LDR below 60% meaning that 40% was idle. So even if they were lending out their FX deposits at the same rate as naira deposits, about $8bn was still idle.


And about offshore operators coming to fill the gap in the event of dorm account closure, how would you move your paper dollars to them after buying from aboki? DHL everytime?

Cyberknight:
After all they closed the borders to discourage rice smuggling in breach of ECOWAS treaty obligations (with the consequent retaliation from Ghana directed at Nigerian traders), they should have simply banned "repurposed" rice from Benin Republic.

Why do you think you have to use the term smuggling if "repurposed" rice wasn't already banned?

Now, the CBN is handling the forex situation pretty well, and I'm sure you can't come up with a recommendation that will achieve a better result. Come up with one, and I should find you its fault(s).

For those saying forex will crash only to go back up, it isn't happening! So some of you said CBN would run out in 2017. We had 3 years of stability. Even with some unavoidable circumstances around COVID 360 to 386 is under 7% still.

ukay2:
Oga Emmanuelwumi. ...sorry Sir for my clarification on secondary marker of FGN Bonds

FGN Bonds are offer at a certain percentage
If 16.39% FGN BOND is offer at 12% in secondary market
What it means is that the new buyer will pay more for buying the bond today.....like paying 3M for a bond of 2.7M.

The new buyer will enjoy the coupon payments of 16.39% until the maturity of the bond....and a repayment of the 3M if he/she holds the bond till maturity.

The new buyer may loose some money if he/she sells the bond at a higher offer price like 13% but may even gain some money if he can sell the bond at 10%.

You will only understand secondary market bond if you invest or trade it

Most FGN BONDS even is primary auction price are sold below the coupon percentages -meaning the primary buyers of the primary auction also paid more for the bond they are selling to you today,.

I hope my little explanations make sense a bit.

Other bonds ogas and gurus can educate us more

Thanks

I think you're both saying thesame thing.
The new buyer gets coupon at 16% as you stated, but since he paid a higher than par price, the yield to him is only 12% as Part Emma stated.

However if he invests 3m today, he won't be getting up to 3m on maturity as you stated.

Using Katamo's calculated price of 1073.

3m invested will get the new buyer just about 2795 units. And since each unit has a face value of 1000, he'll be getting just about 2.8m on maturity.

Now it may seem like a loss, but it isn't. That's because the term to maturity was factored into the purchase price to arrive at the estimated yield.

Now with 2795 units and a yearly coupon of about N163 per unit, his yearly interest earnings come to about 455k, and on a principal of 3m, the yield should have been stated as 15.18%. But it's only quoted as 12% because of the capital shortfall that'll happen at maturity.

Calculations on bonds purchases can be funny. So like Katamo stated, what you need to know in comparing a bond instrument with other investment vehicles is the Yield.

ahiboilandgas:
are u taking from experience ? Cos am talking from expirence ....my friend built his house for 6 million in 2006 live inside the house for 11 years and sold the house for 27 million naira in 2018 ( he didn't renovate for 1 )..if he bought t.b over the 11 years even at 13 percent all through the tenure it will be 12m now which can only buy land in same location......for tenant am not talking of face me and face you type am talking of professional paying 700k above....i have no issues with my tenant the 2 of them 1 firs officer and other a doctor....no problem what so ever infact without them the house will be two big two boring.....

Happy new month sir.

6m compounded at 13% for 11years is 23m not 12m.

For 12 years ('06-2018), it's 26m.

needful:
Oga is it at current rate? Wont the stock go down and ur capital vanished.

There's a chance those stocks may yet lose 5-10% of their current values based on the current state of the market. But it f you don't panic-sell, there's a higher chance (almost a guaranteed one) that you'll get to make15-20% on them between now and April either via dividends or capital gains.

Bamz:
Hypothesis or speculation?

It's called a forecast-one you can bet on.

What's the risk associated with buying stocks? Is capital guaranteed?

Just about 3:
1. If the banks don't make as much profits as they did last year;
2. If their boards propose lower dividends despite thesame or improved earnings.
3.If you fail to sell at the right time to take profit.

Magnifico2000:
You are right. I realised oil price is not falling anymore rather it is pegged around $62-$65 per barrel for the past few months. Perhaps CBN has to be successful with their mop up operations in order for the rates to increase.

Whenever the CBN is ready to hike rates, mopping up will happen in a flash. Just one N750bn OMO issuance at 14.5% will do the trick.

Buying stocks like ZENITH or UBA at current prices will give you about 17.68% (prorated) in dividends.

T-bills discounts will remain sub 12% for the rest of this quarter at least.

zamirikpo:
U r right abt the true yield but that is only clearly enjoyed if reinvesting your interest. I need a certain sum to divest and that sum will be from my upfront interest which I have not been able to get becos I've been waiting for just 13%.

Out of vex I applied for the last auctions but it didn't work at stanbic for 364days.

Really confused.

Sir, true yield is enjoyed on every T-bill investment o, regardless of whether you are reinvesting interest or not.

If someone buys 1m worth at 15%.

If he takes his his 150k interest upfront,

His true RoI =150k/850k = 17.6%

If he reinvests, He gets about 1,176,000 on maturity. His RoI = 176k/1m still 17.6%.

The fact that the bills are sold at a discount is what makes for a higher true yield, and not necessarily the fact that interests are reinvested.

I hope that your money is not just idling around o. It'll be good you fix it in an MMF or some ridiculously cheap stocks than just let returns go unearned.

zamirikpo:
Bros am just tired......the thing should just hit 13 at least....

Looking at the discount rate alone is decptive

364days at 12.5% is effectively 14.29%

14.3% is still manageable for now.

As things are now, It's more likely to go a little lower than it is to trend higher.


High rates too have their own disadvantage.

imagine, in 2018, say the total money supply in the system was about N40trn.

OMO interests topped N 2trn, FG's local debt service also neared N 2trn.

Those two artificial monies alone have diluted the system by close to 10%.

The funny thing is less than 0.5% of the population benefit directly from these artificial monies created, while banks' balance sheet keep getting fat from them.

From about N5trn in 2017, The largest bank by asset may reach N 7trn this year.

Brent also closed above $70 all week long.

12-13% may be the rates level for quite a while-till Q3 end at least.

There's basically no pressure on the CBN to push higher.

If you're keeping your cash in wait for a hike in rates, I'd say-Time to restrategize!

pocohantas:
I wish I cared about your opinion though.

I think you should read previous pages on the thread, you'd find that your posts are not very much in line with the pattern here.

Of the several posts you've made lately on here, I don't think there's anything anyone can point to as having been informed about.

I'd suggest you just learn the discussion pattern here first so you can be guided accordingly as regards your posts.

rebekah2011:
My RSA account will grow.

OBAGADAFFI:
Yes o,

Including IBTC Money Market fund

rebekah2011:
My RSA account will grow.

@ Rebekah, it's the ASSET management not the PENSION management o. So no effect on pension.

@OBAGADAFFI, Equity fund, Guaranteed investment fund, ethical fund, aggressive fund, and maybe bond fund. Those are their funds that have equity exposure. Zero effect on MMF.


However, one easy way to profit from this MTN rally would be to buy their equity fund. Only issue is you won't be able to cash out before 90 days, erstwhile you forgo 2% of your capital.

Reserves now at $45bn!
https://www.cbn.gov.ng/intops/Reserve.asp

OBAGADAFFI:
They are not likely to crash it, if they dont issue more shares.

So for 2018,
Gross earnings N1.04trn
EBITDA N453bn
But PAT eventually dipped to just N109bn

on the back of:
Depreciation : N 150bn
NCC fine N 110 bn
Net Fin. cost N38bn
CI TAX N 45bn

So EPS is about N 5.4

80% payout gives about 430kobo per share.

At N90 listing price, DY is about 4.8%

When it reaches N180, DY will have been crashed to 2.4%, Whereas Zenith is now nearing 15%.

P.S

I used my head as calculator, so there may be approximation errors, but I'm sure, the figures are largely in line.

OBAGADAFFI:
must holders will hold till they issue more shares.

Or Till they crash MTNN DY to 5%, and raise ZENITH to 20%.

Chibuking81:
Those who force them are the one manipulating it. Mtn would have been better stay on their own, that coming to disorganize our market that is getting stabilize after the general election, market is moving one step up, two step down.

We should resist other listing by introduction, any one that fail to come in through IPO should stay clear.

But NOTORE listed by introduction too now.

Chibuking81:
Who on this platform has gotten even 1 unit of mtn share?. If no one has gotten, that means some serious illegality is going on, and both mtn , NSE, and SEC need to be sue to court. How can a stock be listed on the flour of NSE @#90, and for two consecutive trading section none of the ordinary shareholder participants has gotten one unit, and stock keep on closing on 10% on daily basis.

They should have giving them modality to make the share available for the first time at least 3 trading days, even if it mean creating additional share to accommodate new investors. Or get them going first through IPO, which will last for a week or two. This act of listing by introduction is purely scam.

Manipulation is seriously going on, from today market experience shows that various companies CEOs are grabbing their units through back door, massive sale off was witness in Nestle, GTB, Zenith etc, even in the FCMB that has CSL stockbroker as their subsidiary, offloaded heavily at #1.55 the last minutes of today trading, I believed that this has connection with getting money ready for Monday trading, I think since they are big stockbroking company they can easily get mtn stock on cross deal.

I place my buying order at about 9.40, and the order went through, but it didn't show in the bid line up, I placed another one and it didn't show also. When I refresh the bid box many times, I found out that nothing was added or removed, it appeared with the same figure from beginning to end of trading section, and my bid expired.

After they might have done pumping the price to their desired junction, they will look for whom to dump on. Anyway it's better we leave them, after they finish pumping the stock, they should also dump it on themselves.

So are we still going to sue them?