A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets 119 November 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The growing confidence in the Nigerian stock market engendered by various reforms in the sub-sector as well as the economy has attracted the attention of the United Kingdom. This has led to the signing of an agreement to strengthen cooperation and promote mutual development between the Nigerian Stock Exchange (NSE) and London Stock Exchange (LSE), following which the UK delegation paid a courtesy visit to the NSE President in Lagos yesterday. The move, according to representatives of both Exchanges showed that Nigeria has a lot to offer to the global market beyond crude oil. The interest is to develop the capital flows between London and Nigeria

COMMODITIES: West Texas Intermediate and Brent crude traded near the lowest price in four years amid speculation that OPEC will resist production cuts sought by some of its smaller members. Saudi Arabia is probably trimming exports amid a recovery in Libyan supply.

EUROPE: After a six-week absence, Russia’s return to the local bond market is a modest one. The Finance Ministry is planning its smallest sale in 14 months today, a 5 billion-ruble ($107 million) offering of notes due in 2016 that Citigroup Inc. and UralSib Capital say amounts to little more than a gauge of investor appetite. The yield on the bonds, the shortest-dated debt on sale in almost a year, jumped 45 basis points to 10.15 percent yesterday, compared with 6.67 percent when they were last issued on Jan. 15. A year after Russia’s debt chief said he’d target selling mid- and longer-term bonds in 2014,

CHINA: Most Chinese stocks fell as concern investor interest in the new bourse link between Shanghai and Hong Kong has faded overshadowed a rally for smaller companies. SAIC Motor Corp. led declines by automakers in Shanghai after a five-day rally as interest in the bourse link faded.

Hong Kong Exchanges & Clearing Ltd. slid 1.6 percent in Hong Kong, extending a three-day, 7.1 percent rout. Huayi Brothers Media Corp., China’s biggest listed film maker, jumped by the 10 percent daily limit after selling new shares to investors including billionaire Jack Ma.

FX: The pair opened to further pressure on Tuesday, hitting a record high of 175.96 intraday as market reacted to further hike in RDAS result from Monday as well as a very inefficient mode of intervention from the CB. Market broadcast by CB on the scrapping of the capped re-sale spread on intervention funds ignited an instant reaction from market, as the pair gained about 4 big figures intraday after some inflow of liquidity from CB. Reversal of the capped resale margin on intervention funds announced yesterday should ensure some calmness in market in the short-term, provided CB continues their daily intervention as we should see more traction henceforth.

FIXED INCOME: The T-Bills Market finally gave way, as it was selling all the way from both locals and offshore clients. Yields rose an average of 150bps across the curve. Overnight was at about 15% yesterday though liquidity was about NGN 280bn, RDAS funding and funding from FX sales for CBN Intervention were in the mind of traders. The bonds market also continued the push higher, very bearish sentiments in the market. Market would be very edgy through today’s T-Bills primary auction and next week’s MPC meeting.

Macro Economic Indicators
Inflation rate (YoY) for Oct. 2014                          8.10%
Monetary Policy Rate current                                12.00%
FX Reserves (Bn $) as at November 13 2014      37.596

Money Market Highlights

O/N                              15.5433
30 Day                         14.0586
90 Day                         14.7553
180 Day                       15.4965
USD 1 Month              0.1550
USD 2 Months            0.2040
USD 3 Months            0.2319
USD 6 Months            0.3256
USD 12 Months          0.5611

Benchmark Yields
Tenor        Maturity       Yield (%)

91d              12-Feb-15         10.82
182d           07-May-15        12.88
364d           03-Sep-15         13.15
2y                16-Aug-16        13.73
3y                27-Apr-17         13.82
5y               29-Jun-19         13.72

Indicative Currency exchange Rates
Bid          Offer

USDNGN          173.25        173.95
EURUSD          1.2440        1.2642
GBPUSD          1.5515         1.5717
USDJPY           117.32         117.35
USDCHF          0.95275     0.9629
GBPEUR          1.2350        1.2554
USDZAR          10.9252      11.1286
JPYNGN          148.3597    148.4603
CHFNGN         180.31        182.00
EURNGN        216.94         218.30
GBPNGN         270.78        272.18
ZARNGN           14.80         16.72

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