A Review of the Nigerian Energy Industry

Financial market products & services update

Coins on a graph
Coins on a graph

16 December 2014, Sweetcrude, Houston – Local and international financial market products and services update.
FX: Market liquidity was very much improved on Monday on the back of inflows that happened last week from the state owned oil company. Estimated amount sold to banks is $400mio.
With Brent still looking to go lower we cannot heave a sigh of relief anytime soon. Once the flows from the oil companies dry up, pressure would likely continue. No CBN direct intervention yesterday, but at the RDAS they offered $200mio and sold $199.21 at N168.00 (Effective N169.68, which includes the 1%). Market opened around N180.45 but closed stronger at N178.85.

FIXED INCOME: Naira outflows for RDAS settlements further strained system liquidity at week open with overnight closing in the 70% region on Monday. T-Bills market continued to record topsy-turvy sessions. Very few bills still being traded and the few always tend to reach overdone levels. The auctions on Wednesday will see yields inch up higher again. Highlight of the day was short end bond curve (Aug 2016s and April 2017s) touching 15% handle as some players still positioning ahead of the auction. All in all, another day for the bears with inflation headlines having no impact.

US: Two months after the first U.S. Ebola patient died in Dallas, thousands of people have been screened at airports and tracked by health workers, and millions of dollars have been spent readying hospitals. And there’s been just one new case diagnosed in America.

COMMODITIES: Oil in New York fell below $55 a barrel for the first time in more than five years amid speculation that U.S. producers may further increase output as they battle OPEC for market share. Crude in London traded below $60. West Texas Intermediate futures dropped as much as 2.1 percent, after closing yesterday at the lowest level since May 2009. U.S. crude drillers are benefiting as costs fall almost as quickly as prices, according to Goldman Sachs Group Inc. Brent, the benchmark for more than half the world’s oil, may decline to $50 a barrel in 2015, a Bloomberg survey of analysts showed.

EU: European stocks reversed an earlier advance, posting their biggest six-day slump since August 2011, after data showed a decline in manufacturing for the New York area and oil prices resumed a decline. With yesterday’s 2.2% slump to 323.29, the Stoxx Europe 600 Index has erased its annual increase, closing at its lowest level since Oct. 20. The gauge reversed an advance of as much as 0.8% yesterday as the Federal Reserve Bank of New York’s Empire State Index unexpectedly dropped this month and oil prices erased gains. Stoxx 600 energy and commodity producers slid at least 2.9 percent.

CHINA: China’s push to insert its stock market into the global financial system is coming too late for investors holding $1.7 trillion of developing-nation assets. The benchmark gauge in China has soared 33 percent since August through last week, more than any other major market in the world, yet most developing-nation equity funds aren’t benefiting from the rally at all. In fact they’re plunging.

Macro Economic Indicators
Inflation rate (YoY) for Oct., 2014                  7.90%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at December 15 2014  35.813

Money Market Highlights
O/N                              34.2533
30 Days                        17.0578
90 Days                        17.4363
180 Days                      17.8219

USD 1 Month               0.1620
USD 2 Months             0.2090
USD 3 Months             0.2426
USD 6 Months             0.3414
USD 12 Months           0.5978

Benchmark Yields
Tenor        Maturity       Yield (%)

91d               12-Mar-15       14.35
182d             14-May-15      12.07
364d             03-Dec-15      15.23
2yr                16-Aug-16       14.97
3yr                27-Apr-17       14.91
5yr                29-June-19     14.84

Indicative Currency Exchange Rates
                        Bid            Offer
USDNG        179.48           180.18
EURUSD     1.2356           1.2558
GBPUSD      1.5547           1.5749
USDJPY       117.28           117.31
USDCHF      0.95895       0.9691
GBPEUR      1.2460          1.2664
USDZAR      11.5923        11.7957
JPYNGN      153.1197       153.2203
CHFNGN     185.63          187.31
EURNGN     223.19          224.55
GBPNGN      280.70         282.09
ZARNGN       14.410         16.33

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