A Review of the Nigerian Energy Industry

Financial market products & services update

Coins on a graph
Coins on a graph

15 January 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: A coalition of markets and traders’ associations in Lagos have called on both the federal and state governments to initiate policies that would improve the business environment in the state.

Representatives of the coalition, which comprises the Association of Igbos in Commerce, Nnamdi Nwigwe; Traders Right Protection Initiative, Chris Okpala; Amalgamated Traders Association, Lagos, Viginus Odinaka; and Market Leaders Association of Nigeria, Charles Obih, stated this in a communique at the end of an extraordinary general meeting held in Lagos on Wednesday.

FX: We are starting to get better price discovery in market as two way quotes trading in $100k size continued. Two oil majors offered over $70 mio which partly helped keep the market relatively stable. CB again sold more than amount announced to be on offer at yesterday’s RDAS; selling $249.36 mio vs $200 mio on offer. Marginal rate was maintained at 169.68 (1% commission inclusive). 21 banks participated at the auction.

FIXED INCOME: Quiet bonds trading… 23bps lower on T-bills with no OMO auction from the CBN. Average bid cover at the bond auction yesterday with NGN4 billion extra sold on the July 2034s while the sale on March 2024s was NGN 5billion lower with stop rates at 15.20%, 15.429% and 15.479% on Apr 2017s, March 2024s and July 2034s respectively. OMO auction expected today. MPC meeting on 19th and 20th.

CHINA: Copper led a rebound in base metals after slumping to the lowest in more than five years as credit growth surged in China.

The metal found in everything from car wiring to plumbing rallied after sliding yesterday to the weakest since July 2009 amid speculation China’s copper demand growth is slowing. Data showing a stronger-than-expected increase in financing last month triggered a jump in Chinese equities and prompted speculation that the sell-off in metals was excessive.

INDIA: Indian stocks jumped the most in eight months and bonds rallied with the rupee after Reserve Bank of India Governor Raghuram Rajan unexpectedly cut interest rates to help revive growth in Asia’s third-largest economy.

Rajan cut the main repurchase rate to 7.75% from 8%. The first reduction since May 2013 comes after data this week showed consumer prices held below the RBI’s target for a third month amid a rout in oil prices. Arvind Virmani, a member of the central bank’s monetary policy advisory panel, said that “it is time to cut rates.”

COMMODITIES: Oil is seeking a “new equilibrium” as the Organization of Petroleum Exporting Countries abandons its role of keeping supply and demand aligned, according to Goldman. Prices are poised to drop further, testing the ability of U.S. shale drillers to keep pumping. The U.S. benchmark crude price, down more than $60 since June to below $45 yesterday, is on the way to this next threshold. The West Texas Intermediate needs to remain near $40 a barrel during the first half to deter investment in new supplies that would add to the glut.

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   34.508

Money Market Highlights
O/N                               9.4750
30 Days                       13.3739
90 Days                       14.2558
180 Days                     15.7259

USD 1 Month              0.1682
USD 2 Months            0.2160
USD 3 Months            0.2536
USD 6 Months            0.3589
USD 12 Months          0.6224

Benchmark Yields
Tenor       Maturity      Yield (%)
91d             09-Apr-15         11.31
182d           25-Jun-15        13.80
364d          07-Jan-16         15.43
2yr             16-Aug-16         15.11
3yr             31-Aug-17         15.53
5yr             23-Oct-19         15.47

Indicative Currency Exchange Rates
                             Bid         Offer
USDNG            180.00      186.00
EURUSD         1.1684        1.1886
GBPUSD         1.5118         1.5320
USDJPY          117.62.        117.65
USDCHF         1.01405       1.0242
GBPEUR         1.2811         1.3015
USDZAR         11.3518      11.5552
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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