A Review of the Nigerian Energy Industry

Financial market products & services update

Currencies, wells and sprockets.
Currencies, wells and sprockets.

31 December 2014, Sweetcrude, Houston –Local and international financial market products and services update.
FX: USDNGN market remained illiquid. Reported interbank range yesterday was 181.50-184.00. With 2 oil companies in the market, the Right Hand Side pressure (i.e., demand for USD) in recent days was slightly subsided, though we continue to see more Right Hand Side flows.

FIXED INCOME: Another quiet day yesterday; liquidity in the money market opened long about 400bn, so CBN came to float another OMO auction. This time there was no sale and bid rate between 14.50% – 19.00% discount. Locals are looking to pick up cheaper assets due to the liquidity in circulation.

COMMODITIES: Oil climbed for the first time in four days on concern that production disruptions in Libya may pare a global surplus that’s driven crude to a five-year low. Libyan output has fallen below 300,000 barrels a day, the lowest since May, after militants shifted attacks to energy facilities including the country’s largest oil export terminal. the U.S. Commerce Department said lease condensate “processed through a crude oil distillation tower” is a petroleum product, exempt from U.S. export restrictions. WTI for February delivery rose 51 cents, or 1 percent, to $54.12 on the New York Mercantile Exchange after earlier falling as far as $52.70, the lowest since May 2009.

NIGERIA: The total deposits at the Central Bank of Nigeria declined by 2.9 per cent to N6.683tn during the third quarter of 2014, the CBN stated in a new report. This was in contrast to the one per cent increase recorded at the end of the second quarter The CBN Third Quarter Economic Report stated that the development reflected, largely, the 9.6 per cent fall in Federal Government deposits, which more than offset the 3.4 per cent and 4.4 per cent increase in the deposits of banks and ‘others’, respectively. Of the total deposits, the shares of the Federal Government, banks and ’others’ were N3.04tn (45.6 per cent), N 3.334tn (49.9 per cent) and N3.01tn (4.5 per cent), respectively. The central bank stated that the reserve money, at N4.88tn, also rose by 3.4 per cent, in contrast to the 6.2 per cent decline recorded at the end of the preceding quarter. The development, relative to the level at the end of the preceding quarter, was attributed to the increase of 3.4 per cent apiece-in its currency and demand deposit components.

CHINA: A Chinese factory gauge sank to a seven-month low in December, holding near a preliminary reading and putting pressure on policy makers to provide more support for the world’s second-largest economy. The final reading of the Purchasing Managers’ Index was 49.6 this month from 50 in November, compared with the Dec. 16 reading of 49.5. Numbers below 50 indicate contraction.

EUROPE: European Central Bank Chief Economist Peter Praet warned in an interview that lower oil prices increasingly risk de-anchoring inflation expectations, indicating that quantitative easing is becoming more likely. Euro-area inflation will drop below zero “for a longer period” in 2015 amid a slide in the cost of crude, and the Governing Council “cannot simply look through” that, Praet said. Inflation expectations are currently “extremely fragile” and the danger of second-round effects is “higher than usual,” he was cited as saying.

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    35.528

Money Market Highlights
O/N                             11.5450
30 Days                      14.6813
90 Days                      15.3651
180 Days                    16.0661

USD 1 Month             0.1695
USD 2 Months           0.2163
USD 3 Months           0.2552
USD 6 Months           0.3574
USD 12 Months         0.6288

Benchmark Yields
Tenor       Maturity      Yield (%)
91d              19-Mar-15       14.01
182d            14-May-15      11.01
364d            17-Dec-15       16.86
2yr               16-Aug-16       15.28
3yr               27-Apr-17        15.25
5yr               29-June-19     15.37

Indicative Currency Exchange Rates
                       Bid       Offer
USDNG          N/A          N/A
EURUSD     1.2052      1.2254
GBPUSD      1.5469      1.5671
USDJPY       119.59       119.62
USDCHF      0.98475   0.9949
GBPEUR      1.2710       1.2914
USDZAR      11.4605    11.6639
JPYNGN       N/A           N/A
CHFNGN      N/A           N/A
EURNGN      N/A           N/A
GBPNGN      N/A           N/A
ZARNGN      N/A           N/A


In this article

Join the Conversation