A Review of the Nigerian Energy Industry

Financial market products & services update

Coins on a graph.
Coins on a graph.

19 December 2014, Sweetcrude, Houston – Local and international financial market products and services update.
FX: The market didn’t trade yesterday as interbank players try to analyze the implication of not having a Net open position.
The CBN however came up with another circular last night to try and calm down the noise but states that funds purchased by customers/banks MUST be utilized by the second working day after closing the trade (48 hrs from deal date) otherwise, would have to be returned to the Central bank at their own bid rate, which might just be 10% lower than the market rate…. hence a loss would be incurred by the customer than didn’t utilize funds. Find attached the CBN Circular.FIXED INCOME: Market was a bit unstable for most of the day on Thursday; a lot of uncertainty in the market after the FX market went mute due to the circular released. At midday there were demands on the very short end of the curve, 01 Jan and 15 Jan bills, especially were well bid by market players. Move on bonds were much more muted, though street were better sellers as yields were adjusting to auction result. Brent intraday got to $63pbl, but down back to $60 levels.

US: Global stocks surged, with the Standard & Poor’s 500 Index headed for its best two-day rally in nearly two years, as the Federal Reserve pledged patience on boosting rates. Treasuries sank the most in 17 months on speculation borrowing costs will rise next year. Crude resumed a selloff. The S&P 500 jumped 1.7% at 1:04 p.m. in New York, for a two-day gain of 3.7 percent. Ten-year Treasury yields rose seven basis points to 2.21 percent. West Texas Intermediate sank 1.5%.

COMMODITIES: Investors are exiting commodities at the fastest pace in six years, betting a slump in prices isn’t over as corn, oil and gold drop close to their cost of production. Open interest in raw-material futures and options is down 6.5 percent since June, heading for the biggest second-half slump since 2008, exchange data show. U.S. exchange-traded products tracking metals, energy and agriculture saw net withdrawals of $169.4 million in 2014, marking the first two- year slump since the funds were created a decade ago.

EU: After their biggest six-day tumble in three years, European shares have regained more than half of their losses, jumping the most since November 2011 today .The Stoxx Europe 600 Index rallied 3% to 339.05 at the close of trading in London, with banks contributing the most to the advance. The Swiss Market Index posted its biggest jump since January 2013 after the nation’s central bank introduced its first negative deposit rate since the 1970s.

CHINA: China’s central bank offered short-term loans to commercial lenders as the benchmark money-market rate jumped the most in 11 months.

The amount of money made available by the People’s Bank of China wasn’t clear, according to people familiar with the matter. Policy makers are adding funds to the financial system to address a cash crunch as subscriptions for the biggest new share sales of the year lock up funds.

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    35.342

Money Market Highlights
O/N                               65.9667
30 Days                         17.5323
90 Days                         17.2368
180 Days                       17.7424

USD 1 Month                0.1641
USD 2 Months             0.2090
USD 3 Months             0.2454
USD 6 Months             0.3436
USD 12 Months           0.6053

Benchmark Yields
Tenor     Maturity      Yield (%)
91d           12-Mar-15        14.01
182d        14-May-15        11.49
364d       03-Dec-15         13.23
2yr          16-Aug-16         14.99
3yr          27-Apr-17         15.08
5yr          29-June-19       15.04

Indicative Currency Exchange Rates
                      Bid             Offer
USDNG          N/A             N/A
EURUSD     1.2183          1.2385
GBPUSD     1.5559          1.5761
USDJPY      119.39          119.42
USDCHF     0.97535       0.9855
GBPEUR     1.2646         1.2850
USDZAR     11.4927        11.6961
JPYNGN     156.5897     156.6903
CHFNGN       N/A               N/A
EURNGN       N/A               N/A
GBPNGN        N/A               N/A
ZARNGN        N/A               N/A

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