A Review of the Nigerian Energy Industry

Financial market products & services update

Currency bills, coins and gold bars.
Currency bills, coins and gold bars.

14 January 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: During a high profile policy dialogue on ‘Infrastructure and Structural Transformation in Nigeria’ organised by the African Development Bank (AFDB), it was stated that 52% of this amount will come from the treasury, while the private sector is expected to cover the balance of 48%. Nigeria like many other African countries have huge infrastructure gap that needs to be filled for attain expected development. Government had said Nigeria would require $2.9trn in the next 30 years to bridge its infrastructure gap.

FX: Two way quotes trading resumed interbank today following resolutions at today’s emergency FMDA meeting on the back of CB’s review of NOP to 0.1% of SHF. Standard interbank trading size was reduced to $100k, while the bid-offer spread was maintained at 10 points. Market opened at the 183 level and interbank standard size trading level was capped at 184.15 intraday.

FIXED INCOME : Bearish tone in the bond market ahead of today’s auction. Inflation prints had no effect in yesterday’s trading. Average yield on T-bill another 18bps lower. Recently issued OMO bills getting good support. 21 May 15 bill issued on Thursday at 14.20% discount now offered at 13.20%; 04 June 15 also gaining good momentum. All in all another day skewed to the buyers on T-bills and skewed to sellers on bonds.

US: U.S. long bonds have surged amid a 2015 rally in bonds around the world, returning 5.6%, Bank of America Merrill Lynch data show. The securities are on track for their biggest monthly gain in a year. The U.S. is scheduled to sell $13 billion of 30-year debt today. Plunging oil prices suggest inflation will hold in check, and copper joined in the commodities rout today.

Treasuries rose, pushing 30-year yields toward a record low and sending 10-year yields to the least since May 2013, as falling commodity prices cut the outlook for inflation.

INDIA: India’s one-year interest-rate swaps were near an 18-month low on optimism plunging Brent crude prices will keep slowing inflation for the net oil-importing nation, giving the central bank room to cut rates.

Brent slid for a fifth day, extending losses from the lowest close in more than five and half years. Wholesale prices in India probably rose less than 1% in December after stagnating the previous month; a Bloomberg survey shows before data due today. The CPI rose 5% in December from a year earlier, holding below the central bank’s target for a third month.

COMMODITIES: Oil prices have dropped 60 percent since June as the U.S. pumped more shale crude and OPEC resisted calls to cut production, stoking a global supply glut. While the 28-company STOXX 600 Oil & Gas Index has fallen 3.7 percent this month, shares of Rotterdam-based Royal Vopak NV (VPK), the world’s largest independent storage tank operator, have surged 14 percent.

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    34.491

Money Market Highlights
O/N                               9.5000
30 Days                       13.0378
90 Days                       13.9506
180 Days                     15.2959

USD 1 Month              0.1665
USD 2 Months            0.2135
USD 3 Months            0.2533
USD 6 Months            0.3576
USD 12 Months          0.6224

Benchmark Yields
Tenor      Maturity       Yield (%)
91d             09-Apr-15        11.61
182d          25-Jun-15        13.69
364d         07-Jan-16         15.77
2yr            16-Aug-16         15.10
3yr            31-Aug-17         15.38
5yr            23-Oct-19         15.45

Indicative Currency Exchange Rates
                        Bid        Offer
USDNG       180.00      186.00
EURUSD    1.1706        1.1908
GBPUSD    1.5081        1.5283
USDJPY     116.98        116.99
USDCHF    1.01215      1.0223
GBPEUR    1.2757        1.2961
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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