A Review of the Nigerian Energy Industry

Financial market products & services update

Investment analysis, dollar bills & a compass.
Investment analysis, dollar bills & a compass.

13 January 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: The Federal Government has listed “13 National Strategic Export Products” to replace crude oil. The Minister of Industry, Trade and Investment, Olusegun Aganga who stated this, said the move is intended to revive the ailing national economy. Aganga who spoke when he visited the Nigeria Export Promotion Council (NEPC), in Abuja, said they are good replacements for crude oil in the market. The 13 products are Agro-industrial- palm oil, cocoa, cashew, sugar and rice; Mining Related- cement, iron ore; Auto parts/cars, aluminium and oil and gas industrial products; Petroleum products, fertiliser, petrochemical and methanol.

FX: Yesterday, we start to see effect of dearth in USD liquidity as the oil flows dry up. New CB review of NOP to 0.1% of SHF not expected to improve market liquidity significantly in light of the fact that total market NOP comes to slightly above $20 mio which is a far cry from the average USDNGN daily turnover of about $250 mio before the implementation of the new policies.

FIXED INCOME: Almost seems like the local market is starting to ignore Brent, T-bill remains in good demand with the money market still very liquid. O/N rates ranging from 5%-9% area. Bonds rates was a bit stable with earlier seen PFA interest giving necessary support. OMO auction yesterday with stop rate unchanged at 14.20% discount (15.03% yields).

US: Stocks fell, with energy producers leading declines, as crude extended losses after Goldman Sachs Group Inc. cut its price forecasts. The yen rose with gold on haven demand.

The Standard & Poor’s 500 Index dropped 0.6% yesterday in New York, following two weeks of declines. The Stoxx Europe 600 Index climbed 0.6 percent. Treasury 10-year note yields slipped one basis point to 1.93 percent. U.S. oil sank 3.9 percent to $46.51 a barrel. Copper declined to a five- year low, while gold futures climbed 1.1 percent to $1,229.10 an ounce. The yen gained against most of its major counterparts.

CHINA: Copper fell to the lowest in five years as record Chinese imports failed to convince investors that demand from the largest metals consumer is strong enough to eliminate a supply glut.

The metal slid as much as 1.3 percent to trade at the weakest since October 2009. Copper is leading declines in industrial metals this year as raw-material prices slump on speculation supply growth is outpacing consumption. China imported a record volume of unwrought copper and copper products in 2014, customs data showed today.

COMMODITIES: Commodities fell to a 12-year low on concern that the global surplus in crude oil will continue, and slowing economic growth in China and Europe means less demand for raw materials.

The Bloomberg Commodity Index of 22 energy, agriculture and metal prices dropped as much as 1.6 percent to 101.95, the lowest since November 2002. In 2014, the gauge declined 17 percent, the most since the global financial crisis in 2008. The measure rose to a record in July 2008, more than doubling from the start of 2000.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                     7.90%
Monetary Policy Rate current                            13.00%
FX Reserve (Bn $) as at January 09 2015       34.489

Money Market Highlights
O/N                                  9.6667
30 Days                          13.5800
90 Days                          14.4366
180 Days                        15.6803

USD 1 Month                  0.1665
USD 2 Months                0.2140
USD 3 Months                0.2528
USD 6 Months                0.3591
USD 12 Months              0.6209

Benchmark Yields
Tenor       Maturity      Yield (%)
91d              09-Apr-15       11.61
182d            25-Jun-15       14.49
364d            07-Jan-16       15.91
2yr               16-Aug-16       15.06
3yr               31-Aug-17       15.38
5yr               23-Oct-19       15.28

Indicative Currency Exchange Rates
                           Bid            Offer
USDNG            180.00        186.00
EURUSD          1.1733         1.1935
GBPUSD          1.5038         1.5240
USDJPY           118.34         118.37
USDCHF          1.00995     1.0201
GBPEUR          1.2691        1.2895
USDZAR          11.3866     11.5900
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

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