A Review of the Nigerian Energy Industry

Financial market products & services update

Chart, dollar bills and a compass.
Chart, dollar bills and a compass.

30 January 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Economic growth in Nigeria, Africa’s biggest crude producer, is projected to slow to 5.5% this year after oil prices plunged, the statistics office said. GDP growth is set to decelerate from an estimated 6.2% last year, the National Bureau of Statistics said in a report on its website. The economy is forecast to expand 5.8% in 2016 and 5.8% in 2017.

The weaker currency will probably boost inflation to an average 8.8% in 2015 from 8.1% in 2014, the agency said. It’s set to reach an average of 8.1% in 2016 and 7.5% in 2017.

FX: Oil inflows this week into the market (estimate of over $550 mio) as well as consistent CBN’s presence continue to give the pair some support, helping to tame the pressure in the short term. The FX market was very active yesterday with rates quickly rising after market opened. The trend pretty much stabilised between a tight range for most of the day.

We expect the currency to stabilize in the near future if the CBN continues to intervene in support of the Naira.

FIXED INCOME: Some more sell off yesterday in the T-bill market as some levels looked good enough to sell to reinvest at the OMO auction which has been seen to be constant (though some last minute short covering seen). Today will be the last trading day for the month and we do not expect anything different in the absence of new information. The Bonds market witnessed a quiet trading day.

CHINA: China’s fiscal revenue increased the least since 1991 last year, curbing scope to stimulate demand. Government revenue rose 8.6% in 2014, according to a statement on the Ministry of Finance’s website, down from 2013’s 10.2% increase and a peak of 32% in 2007. Public expenditure rose 8.2%, the least since 1987.

A property slump and declining factory profits have dented the central and local governments’ tax bases.

U.S: The dollar weakened against most peers, with a gauge of the greenback’s strength paring a seventh monthly gain, and Standard & Poor’s 500 Index futures slipped. Oil headed for its longest monthly losing streak since 2009, while gold climbed.

The U.S. currency lost 0.1% to the euro and 0.4% against the yen by 7:15 a.m. in London, with the Bloomberg Dollar Spot Index set to cap its longest streak of monthly advances since 2009. Gold advanced 0.4% and oil in New York traded at $44.46 a barrel, down 16 percent for its seventh straight monthly loss.

COMMODITIES: Oil headed for the longest run of monthly losses since January 2009 amid speculation that rising U.S. crude supplies will exacerbate the global glut that spurred last year’s price collapse. Royal Dutch Shell Plc, Occidental Petroleum Corp. and ConocoPhillips have pledged to cut spending by almost $10 billion this year, enough to drill more than 1,400 shale wells.

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     34.378

Money Market Highlights
O/N                                 10.1075
30 Days                           14.5748
90 Days                           15.4851
180 Days                         16.5114

USD 1 Month                0.1709
USD 2 Months              0.2106
USD 3 Months              0.2546
USD 6 Months              0.3579
USD 12 Months            0.6204

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           30-Apr-15        13.97
182d         30-Jul-15        15.40
364d         21-Jan-16        16.29
2yr            16-Aug-16        15.05
3yr            31-Aug-17        15.27
5yr            23-Oct-19        15.25

Indicative Currency Exchange Rates
                          Bid         Offer
USDNG         187.00       191.00
EURUSD      1.1231         1.1432
GBPUSD      1.4968         1.5170
USDJPY       117.845        117.875
USDCHF      0.92145      0.93155
GBPEUR      1.3197          1.3400
USDZAR      11.4515       11.6549
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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