A Review of the Nigerian Energy Industry

Financial market products & services update

Coins on a graph.
Coins on a graph.

07 January 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: The dwindling revenue to the federation account owing to the declining crude oil prices may hinder state governments from securing loans from Nigerian banks and other multilateral institutions as banks have already resolved to stop lending to them to forestall a debt crisis.

Crude oil, the mainstay of the Nigerian economy, has suffered more than 50 per cent fall in the international price of UK Brent/Bonny Light crude since mid-last year. In addition to that, most state governments in Nigeria have poor records of internal revenue collection.

FX: We saw some slight appreciation towards end of day following some oil flow in market (from a late oil auction from yesterday). Brent testing further lows had a subdued effect as the lack of 2 way market ensures market remain flow driven. Oil major is reported to be offering about $50 mio today. Not much change in traded level expected today

FIXED INCOME: There was OMO auction yesterday with stop rate unchanged from the previous day. Yields headed south yesterday again in the Tbill market by some 15bps but demand waned in the bond market as Brent sentiments continues to weigh as it tests all new lows.. Most actively traded bills were 29 Jan 15 (23 day paper down 167bps driven by liquidity managers) and 23 Apr 15 (down 27bps as its the next 91day bill at the 21 Jan Tbill auction) – NGN15.179bn and 14.838bn traded respectively.

USA: Stocks extended the longest losing streak in 13 months as oil pushed losses further below $50 a barrel and data showed slower growth in the services industries. Bonds rallied and the yen strengthened with gold.

EU: European stocks erased gains in the last hour of trading, with lenders pushing them lower for a third consecutive day. The Stoxx Europe 600 Index retreated 0.6 percent to 331.86 at 4:35 p.m yesterday in London after rising as much as 0.6 percent as energy stocks rebounded. The measure dropped as much as 0.9 percent earlier, after data showed a gauge of euro-area services and manufacturing fell short of a preliminary reading.

COMMODITIES: Oil’s selloff has turned energy companies into the biggest losers in an equities retreat that has wiped more than $1 trillion from values this year amid concern that global growth is slowing. U.S. data showed service industries expanded in December at the slowest pace in six months, while factory orders fell more than estimated.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                  7.90%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at December 31 2014  34.493

Money Market Highlights
O/N                               11.1517
30 Days                        13.8985
90 Days                        14.5575
180 Days                      15.2965

USD 1 Month               0.1677
USD 2 Months             0.2162
USD 3 Months             0.2511
USD 6 Months             0.3603
USD 12 Months           0.6283

Benchmark Yields
Tenor    Maturity    Yield (%)
91d          09-Apr-15     11.74
182d        25-Jun-15     12.98
364d       17-Dec-15      16.33
2yr          16-Aug-16      14.83
3yr          27-Apr-17       14.85
5yr          29-June-19    14.91

Indicative Currency Exchange Rates
                          Bid             Offer
USDNG           180.00         186.00
EURUSD        1.1834           1.2036
GBPUSD         1.5077           1.5279
USDJPY          118.25           118.28
USDCHF         1.00125        1.0114
GBPEUR         1.2616           1.2820
USDZAR         11.6048         11.8082
JPYNGN         156.1697       156.2703
CHFNGN           N/A               N/A
EURNGN           N/A               N/A
GBPNGN            N/A               N/A
ZARNGN            N/A               N/A

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