A Review of the Nigerian Energy Industry

Financial market products & services update

finance04 December 2014, Sweetcrude, Houston – Local and international financial market products and services update
NIGERIA: Nigeria Revises Oil Benchmark Price to $65 a Barrel. New price approved by President Goodluck Jonathan for revised 2015-2017 Medium Term Expenditure Framework, Lagos-based ThisDay newspaper reports, citing Finance Minister Ngozi Okonjo-Iweala. Benchmark price cut from $73/bbl.

NIGERIA Nigeria yesterday got a facility worth $200 million from Germany to develop her small scale renewable energy sector. The green loan received from the German Development Bank (KFW) would support small and medium enterprises specifically for development of renewable energy sources and other energy efficiency projects. This was disclosed by the leader of the German delegation; Renate Von Bodden at a Bi-national Commission’s meeting on energy between both countries in Abuja.

FX: We had another late CBN intervention yesterday which ensured spot printed at the 179 handle at close after opening at 182.50/60. Day’s price action was consistent with the recent trend – market opened nearly 2 big figures above previous close, but with limited upside on Wednesday. The pair settled between 181-183 range intraday before pushing much lower after the late CBN intervention, touching 177 level intraday lows sparingly before closing at 179.00/10. RDAS result had the CBN maintaining the marginal rate at the previous close -169.68(inclusive of 1% commission) and selling $289.65 mio despite announcing earlier that $200 mio was on offer.

FIXED INCOME: The fixed-income market is gradually reflecting the fundamentals which suggest higher yields. Tbill auction results with the 182 day stop rate up 269bps to close at 13.49% discount (14.46% yield) and 1year up 109bps to close at 13.58% discount (15.71% yield) will force a welcomed re-pricing on Thursday. Secondary trading will be volatile today with street adjusting to new levels and in the medium term tbill rates will start to look relatively attractive again. Bond market relatively quiet with street buyers of the short end and sellers of the long end.

COMMODITIES: West Texas Intermediate rose for a second day as investors weighed an unexpected drop in U.S. crude inventories against the prospect of sustained production from OPEC. Brent gained in London. WTI for January delivery advanced as much as 84 cents to $68.22 a barrel in electronic trading on the New York Mercantile Exchange was at $67.92 at 2:58 p.m. Singapore time. Brent for January settlement rose as much as 68 cents, or 1 percent, to $70.60 a barrel on the London-based ICE Futures Europe exchange.

INDIA: India’s 10-year bond yield held at a 16-month low amid speculation slowing inflation and the prospect of interest-rate cuts will buoy demand. Reserve Bank of India Governor Raghuram Rajan, who kept borrowing costs unchanged for a fifth meeting this week, signalled he may lower them early next year.

EUROPE: Mario Draghi is testing his policy speed limit. After pledging last month to raise inflation in the euro area “as fast as possible,” the European Central Bank president now faces a go-slow from multiple members of the Governing Council. Amid German disquiet over bond-buying and a wait-and-see approach by his own vice president, Draghi is looking for consensus on what further action the ECB can take and when.

Macro Economic Indicators
Inflation rate (YoY) for Oct. 2014                       8.10%
Monetary Policy Rate current                             13.00%
FX Reserves (Bn $) as at December 1 2014      36.682

Money Market Highlights

O/N                              15.7917
30 Day                         14.0120
90 Day                         14.5082
180 Day                       15.4150
USD 1 Month              0.1570
USD 2 Months            0.1973
USD 3 Months            0.1723
USD 6 Months           0.3262
USD 12 Months         0.5703

Benchmark Yields
Tenor     Maturity     Yield (%)

91d           05-Mar-15      12.43
182d         14-May-15      14.53
364d        03-Sep-15       13.73
2y             16-Aug-16       13.70
3y             27-Apr-17       13.67
5y             29-Jun-19      13.84

Indicative Currency Exchange Rates
                          Bid          Offer
USDNGN        179.65        180.35
EURUSD        1.2211          1.2413
GBPUSD        1.5581          1.5783
USDJPY         119.87         119.90
USDCHF        0.97275      0.9829
GBPEUR        1.2635         1.2839
USDZAR        11.0901      11.2935
JPYNGN        149.7097   149.8103
CHFNGN       183.27         184.96
EURNGN       221.09        222.45
GBPNGN       281.03        282.43
ZARNGN        15.09           17.02

In this article

Join the Conversation