A Review of the Nigerian Energy Industry

Financial market products & services update

Currency notes, coins and gold bars.
Currency notes, coins and gold bars.

21 January 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Major Oil Marketers Association of Nigeria (MOMAN) has decried the non-payment of an outstanding N250 billion subsidy claims for 2014, urging the federal government to pay the bills and deregulate the downstream sector.

Speaking to journalists in Lagos on Tuesday on the recent reduction of the pump price of petrol, the Executive Secretary of MOMAN, Mr. Obafemi Olawore, said the outstanding N250 billion claims include accumulated interest and FX differentials. Olawore further disclosed that a directive has been given by the association to members to conform to the directive of the Minster of Petroleum Resources, Mrs. Diezani Alison-Madueke and adjust their pump price from N 97 to N87 per litre.

FX: The pair closed higher yet again yesterday, though we saw less volatility. A late brief downward swing inspired by another suspected CBN’s intervention as well as some oil major flows which stirred a short-lived intraday appreciation. MPC meeting held with all parameters left unchanged. There is an emergency meeting of all FX dealers this morning and this determine when market would open.

FIXED INCOME: System liquidity increased to NGN523 billion following FAAC inflows causing continued demand in the T-bill market. Mixed bag in the bond market yesterday- selling from some PFA set the initial bearish tone before some demand emerged to close. The MPC outcome was largely as expected, with the MPC voting to keep interest rates unchanged. Although upside inflation risks are seen, there was little justification to tighten interest rates further just yet. Not Seen sizeable flows from International accounts post the JPM news. T-bill auction today with all three tenors on offer.

US: Treasury 30-year yields were three basis points from an all-time low, with a new-year rally pushing returns past 7%, as plunging crude oil prices indicate inflation will slow.

This month’s advance is more than double the 3.4% gain from benchmark 10-year notes, according to Bank of America Merrill Lynch data. The MSCI All-Country World Index of shares has fallen 1.2% including reinvested dividends. A record decline in yields around the world is helping drive demand for U.S. debt.

CHINA: Chinese stocks posted the biggest two-day rally since 2009, led by financial companies, as investors speculated Monday’s rout was overdone given prospects for further monetary stimulus.

China Life Insurance Co., Bank of China Ltd. and Haitong Securities Co. soared more than 9%. Poly Real Estate Industry Group. led a rally for developers, surging 6.8%. PetroChina Co., the biggest oil company, jumped 7.3%.

COMMODITIES: Gold exceeded $1,300 an ounce for the first time since August on speculation slowing global growth will prompt central banks to boost stimulus, spurring haven demand. After shunning gold 2years, investors are returning to the metal amid concern U.S. growth won’t be enough to offset weakness in foreign economies.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                 8.00%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     34.466

Money Market Highlights
O/N                                 7.0000
30 Days                         12.8705
90 Days                         14.2773
180 Days                       15.5592

USD 1 Month                0.1685
USD 2 Months              0.2138
USD 3 Months              0.2567
USD 6 Months              0.3559
USD 12 Months            0.6159

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           16-Apr-15        11.01
182d         25-Jun-15       15.17
364d         07-Jan-16       16.52
2yr            16-Aug-16       15.28
3yr            31-Aug-17       15.53
5yr            23-Oct-19       15.63

Indicative Currency Exchange Rates
                          Bid         Offer
USDNG         180.00       190.00
EURUSD      1.1469         1.1671
GBPUSD      1.5068         1.5270
USDJPY       117.67          117.70
USDCHF      0.86505      0.8752
GBPEUR      1.3009         1.3213
USDZAR       11.4741       11.6775
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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