A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

05 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.

NIGERIA: The Managing Director of Federal Mortgage Bank of Nigeria (FMBN), Mr. Gimba Ya’ Kumo, has said the Federal Government has concluded all necessary arrangements to recapitalise the apex mortgage bank to the tune of N250 billion.

The FMBN boss said with the effective implementation of all the Memorandum of Understanding (MoU) signed; the bank would deliver over four million mortgages by 2019. According to him, government is making efforts to reduce the cost of housing through the introduction of new building technology and reduction in building materials.

FX: USDNGN traded new high again yesterday as we begin to see the flows from oil multinationals start to take its toll. CBN did supply some considerable amount of liquidity into the market to support the pair and give it a softer close.

FIXED INCOME: T-bill auction saw yields lower by average of 26bps with stop rates at 11.289% (91day), 14.9351% (182day) and 16.6785% (364day). T-bill secondary trading was mixed bag but overall closing weaker (+6bps). We expect some demand today in T-bills also with street scrambling to cover short positions on 06 Aug 15 (182day bill on offer at yesterday’s auction).

CHINA: China’s latest move in the global monetary-easing game may be just the start.

Economists from Deutsche Bank AG, Bank of America Corp. and Nomura Holdings Inc. are among those forecasting more cuts to reserve requirements and benchmark interest rates after the People’s Bank of China said Wednesday its lowering lenders’ reserve ratio by 50 basis points. That move may inject about 600 billion Yuan ($96 billion) into the economy.

US: Treasuries advanced for a second day as Greece lost a source of funding, spurring demand for the relative safety of U.S. debt. The yield on the 10-year Treasury fell 0.01% to 1.74% at 7:30 a.m. in London, according to Bloomberg Bond Trader data. The 2.25% note due in November 2024 rose $1.25 per $1,000 face amount, to 104 18/32.

Ten-year Treasuries yield 79bp more than the average among their Group-of-Seven counterparts, data compiled by Bloomberg show. While the premium has narrowed from more than 1% in December, it’s still more than the average of 4bp for the past five years.

COMMODITIES: Gold climbed for a second day as policy makers in Europe tightened the terms of Greece’s bailout and the People’s Bank of China joined central banks acting to counter slower growth, boosting demand for a haven. Bullion for immediate delivery rose as much as 0.4% to $1,274.18 an ounce, and traded at $1,271.48 at 2:48 p.m. in Singapore, extending Wednesday’s 0.7% gain, according to Bloomberg generic pricing.

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     34.090

Money Market Highlights
O/N                                 12.3767
30 Days                           14.0057
90 Days                           14.6392
180 Days                         16.1640

USD 1 Month                0.1735
USD 2 Months              0.2105
USD 3 Months              0.2551
USD 6 Months              0.3608
USD 12 Months            0.6254

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           07-May-15        11.25
182d         06-Aug-15        14.00
364d         21-Jan-16        14.05
2yr            16-Aug-16        15.08
3yr            31-Aug-17        15.30
5yr            23-Oct-19        15.33

Indicative Currency Exchange Rates
                          Bid         Offer
USDNG         189.00       195.00
EURUSD      1.1264         1.1466
GBPUSD      1.5100        1.5102
USDJPY       117.33         117.36
USDCHF      0.91905      0.9292
GBPEUR      1.3271         1.3475
USDZAR      11.3300      11.5333
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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