A Review of the Nigerian Energy Industry

Financial market products & services update

Coins on a graph
Coins on a graph

12 December 2014, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: The Debt Management Office (DMO) has, in a circular posted on its website on Thursday, announced its plans to sell N65 billion worth of sovereign bonds on December 17. The debt office said that the bonds’ maturity dates will range from 3, 10 to 20 years. The three-year bonds will be for N10 billion, the 10-year tenor bond will be for N30 billion, while the 20-year tenor bond will be for N25 billion. The bonds will mature on August 2016, March 2024 and July 2034, respectively. The DMO said that the bonds will have 13.05 per cent, 14.20 per cent and 11.15 per cent yield rates, respectively.

FIXED INCOME: O/N rates have eased to 15% from highs of 60% earlier in the week following tbill maturity of NGN160bn. More of same yesterday in the tbill market with flows largely one way – lots of offers wanted on the short dated tbills before a bearish tone to close as street digested the contents of the Q1 2015 tbill auction calendar. There is a Tbill auction next week Wednesday with NGN33.87bn of 91day bills, NGN51.300bn of 182day and NGN110.39bn of 364day bills. 08 January seems well bid testing 14% handle from Wednesday’s high of 17%. Bonds quiet and another 2bps higher as some sellers were seen. Average yield on tbills at 14.50% and bonds 13.83%.

FX: Market opened at 181.40/50 and we saw Tempered volatility as market players exercised a bit of caution as they expect the state owned Oil Company to sell USD into the market anytime now. This coupled with the anticipated end of day intervention by CBN served to ease the pressure on the pair. Market closed at 179.50/60.

EU: U.K. house prices extended their longest stretch of gains since before the financial crisis as London rebounded from a slowdown earlier in the year, according to reports. The average value of a home in England and Wales rose 0.8 percent to 280,733 pounds ($441,300) in November, the 17th consecutive month of increases, the groups said today. That’s the most since more than two years of gains through October 2007.

COMMODITIES: Brent crude continued its march downwards on Friday and dropped to a 5-1/2-year low of $63 a barrel, bringing this week’s losses to more than 8 percent amid persistent concerns over a global supply glut and a bearish demand outlook. The Organization of Petroleum Exporting Countries (OPEC), which accounts for a third of global oil output, cut its 2015 demand forecast to the lowest in more than a decade earlier this week.

CHINA: China’s economy slowed in November as factory shutdowns exacerbated weaker demand, raising pressure on the central bank to add further stimulus. Factory production rose 7.2 percent from a year earlier, retail sales gained 11.7 percent, and investment in fixed assets expanded 15.8 percent in January through November from a year earlier, official data showed.

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  35.813

Money Market Highlights
O/N                           17.3350
30 Days                    16.5328
90 Days                    16.4405
180 Days                  17.0266

USD 1 Month            0.1608
USD 2 Months          0.2080
USD 3 Months          0.2406
USD 6 Months          0.3384
USD 12 Months        0.6003

Benchmark Yields
Tenor       Maturity       Yield (%)
91d              05-Mar-15        13.50
182d           14-May-15         12.87
364d          03-Dec-15          15.29
2yr             16-Aug-16          14.30
3yr             27-Apr-17           14.33
5yr             96-June-19        14.33

Indicative Currency Exchange Rates
                           Bid              Offer
USDNG          180.95             181.65
EURUSD       1.2306              1.2508
GBPUSD        1.5610              1.5812
USDJPY        118.75               118.78
USDCHF      0.96305           0.9732
GBPEUR      1.2560              1.2764
USDZAR      11.4928            11.6962
JPYNGN      152.1797          152.2803
CHFNGN     185.88             187.57
EURNGN     225.08             226.44
GBPNGN      283.28            284.68
ZARNGN       14.638             16.55

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