A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

23 January 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The CBN is trying to keep dollars contained within the banking system to prevent reserves bleeding as the nation’s foreign-exchange reserves have declined 20% over the past year. Steps by the central bank follow an agreement between currency traders in Lagos earlier on Wednesday that dealing be curtailed should the currency fluctuate more than 2% against the dollar a day.

Slowing down currency trades will help moderate movements and give policy makers time to identify why demand has increased before intervening with dollars.

FX: Market resumed trading in $500k standard size after the upward review in NOP to 0.5% of SHF resulting in significant boost in liquidity especially in the first few hours. However, late CBN intervention was significant enough to push the momentum southward in the last hour of the day’s trading session. The interbank market reportedly traded much lower as CBN injected further LHS flows to support the pair.

FIXED INCOME: CBN sold NGN260bn 2nd July 2015 OMO bills yesterday at Yield of 15.15%. Before the result, there was a lot of buy interest on T-bills as excess cash still lingered in the market, but at the end of the trading session profit taking activities were seen in the market. Bonds had same trend, day on day yield inched up by marginal 2bps.Brent at the moment $48.26.

EUROPE: The European Central Bank’s resolve to funnel more than a trillion dollars into the region’s capital markets may be a boon for borrowers across the Atlantic.

ECB President Mario Draghi unveiled a bond-purchase program to ward off signs of deflation threatening to engulf the euro area similar to the exercise undertaken by the Federal Reserve six years ago. The infusion aimed at boosting asset prices may prompt investors to shift money into U.S. corporate bonds, which offer the most yield relative to company debt in Europe in a decade.

CHINA: China is proposing an overhaul of its foreign-investment rules with a draft law that could mark the biggest change in decades to the way global companies do business in the country.

The Commerce Ministry this week put forward a draft that could unify regulations overseeing foreign investment in China, scale back restrictions and begin regulating the variable interest entities that are commonly used to circumvent foreign-ownership limits. The ministry will accept feedback on the plan from the public until Feb. 17 2015.

COMMODITIES: Oil jumped after the death of King Abdullah of Saudi Arabia, the biggest producer in the OPEC.

Futures rallied as much as 3.1% in New York and 2.6% in London after the Saudi royal court announced the death in a statement. Crown Prince Salman bin Abdulaziz will succeed Abdullah on the throne. The kingdom, the world’s largest crude exporter, led OPEC’s decision to maintain its oil-production quota at a meeting in November, exacerbating a global glut that’s driven prices lower.


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     34.462

Money Market Highlights
O/N                                 9.2917
30 Days                         13.1106
90 Days                         14.2324
180 Days                       15.4591

USD 1 Month                0.1682
USD 2 Months              0.2132
USD 3 Months              0.2561
USD 6 Months              0.3574
USD 12 Months            0.6229

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           23-Apr-15        13.28
182d         25-Jun-15        14.88
364d         07-Jan-16       16.52
2yr            16-Aug-16        14.88
3yr            31-Aug-17        15.38
5yr            23-Oct-19        15.38

Indicative Currency Exchange Rates
                          Bid         Offer
USDNG         185.00       193.00
EURUSD      1.1248         1.1450
GBPUSD      1.4884         1.5086
USDJPY       118.22          118.25
USDCHF      0.86545      0.8756
GBPEUR      1.3101          1.3305
USDZAR      11.3281       11.5315
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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