A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

10 December 2014, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: : Finance Minister Okonjo-Iweala says economic growth to slow as oil prices decline, Wall Street Journal reports, citing interview with minister. She had mentioned that slower growth may cause delay to some infrastructure spending and higher taxes on informal economy. Okonjo-Iweala had predicted GDP growth of 6.3%-6.5% for 2015, compared with estimated 6.75% in 2014FX: The pair opened at 182.50/60 and closed at 182.70/80. Brent’s low for the day was 65.29 putting pressure on the market. Liquidity was supplied yesterday by an oiler coupled with CBN intervention (estimated amount sold by the 2 parties is $350mio).This had little or no impact in the market. At the risk of sounding like a broken record, same trend likely to occur today and for the rest of the week.

FIXED INCOME: System liquidity remains negative (opened approximately NGN127bn short) and is the key driver of yields on 25 Dec 14, 1 Jan 15 and 8 Jan 15 Tbills. Some respite in the money market yesterday from RDAS refund by CBN to banks with O/N rates closing around 40%. Rest of the Tbill curve felt bid but only a handful of Tbills still being quoted by street. Bond market though quiet feels well offered as all eyes are on the bond auction coming up next week Wednesday. On offer will be NGN10bn August 2016s, NGN30bn March 2024s and NGN25bn July 2034s

COMMODITIES: Brent resumed its decline as an Iranian official predicted a further slump in prices if solidarity among OPEC members falters. West Texas Intermediate in New York also erased yesterday’s gains.

Brent has collapsed 40 percent this year as OPEC agreed at a Nov. 27 gathering not to cut output to force a slowdown in U.S. production, which has risen to the highest level in three decades.

CHINA: Chinese shares jumped on speculation the government will boost stimulus after inflation reports fell short of estimates. The dollar dropped amid the biggest global currency swings in a year, oil slipped and Greek bonds rose.The Shanghai Composite Index added 2.9 percent, rebounding after yesterday’s 5.4 percent plunge, amid the slowest consumer price gains since 2009. Futures on the Standard & Poor’s 500 Index were little changed by 7:15 a.m. in London, and Euro Stoxx

EUROPE: European Central Bank Executive Board member Peter Praet said falling oil prices could push the euro-area inflation rate below zero, just as policy makers prepare to examine options for quantitative easing. The ECB intends to expand its balance sheet by as much as 1 trillion euros ($1.2 trillion) to flood the 18-nation currency bloc with liquidity, and will review its current stimulus early next year. Plunging oil prices are putting further downward pressure on inflation that slowed to 0.3 percent in November, nudging the central bank toward the politically controversial path of large-scale government-bond buying.

Macro Economic Indicators
Inflation rate (YoY) for Oct., 2014                      8.10%
Monetary Policy Rate current                             13.00%
FX Reserve (Bn $) as at December 15 2014     36.565

Money Market Highlights
O/N                              61.4333
30 Days                       18.0363
90 Days                       17.0376
180 Days                     17.0800

USD 1 Month              0.1585
USD 2 Months            0.2012
USD 3 Months            0.2388
USD 6 Months            0.3379
USD 12 Months          0.5981

Benchmark Yields
Tenor      Maturity         Yield (%)
91d             05-Mar-15        14.48
182d          14-May-15         13.66
364d          03-Dec-15         15.57
2yr             16-Aug-16         14.15
3yr             27-Apr-17         14.26
5yr             26-June-19       14.10

Indicative Currency Exchange Rates
                      Bid           Offer
USDNG       181.33        182.80
EURUSD    1.2291        1.2493
GBPUSD    1.5568        1.5770
USDJPY     119.10         119.95
USDCHF    0.96495     0.9751
GBPEUR    1.2453        1.2747
USDZAR     11.3736      11.5770
JPYNGN    151.4797     152.5803
CHFNGN   186.46        188.15
EURNGN   224.41        225.77
GBPNGN   283.95        285.35
ZARNGN    14.88          16.80

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