A Review of the Nigerian Energy Industry

Financial market products & services update

Financial chart, currency and a compass.
Financial chart, currency and a compass.

06 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update. NIGERIA: Nigeria will probably remain in JPMorgan Chase & Co.’s local-currency emerging-market bond indexes tracked by over $200 billion of funds, according to the central bank governor. The main issue was liquidity and we are convinced that liquidity has come up to the level they desire,” Godwin Emefiele said by phone from Abuja. “It’s gone to a range of about $250 million to $300 million a day.” FX: Another record high for USDNGN spot yesterday, gapping early in the day’s session to trade the 194 level from a 192.70 open, hitting a 194.50 intraday high as market sustained the week’s bid price action. CBN yet again supplied decent amount of liquidity towards close which helped tame the pressure on the pair. Spot eventually closed unchanged from previous level at about mid 192 levels. Likely we push for further test upward at open today, with no major oil company sale expected. FIXED INCOME: Despite most benchmark bonds closing flat, tone was firm in yesterday’s session. In T-bills, lots of price action yesterday following the auction results. Covering of short positions on the 91day and 182day bills and demand filtered into the rest of the curve. Money market liquidity down to NGN141bn from NGN455bn at this week’s open. NGN167bn CRR debit and funding for RDAS took most of the liquidity out. CHINA: The Yuan’s worst start to a year on record has China’s policy makers in a dilemma: if they keep interest rates high, the economy suffers. If they cut, the Yuan declines and spurs capital outflows, and the economy suffers. The CHART OF THE DAY shows the Yuan tends to weaken as the extra yield investors earn on China’s two-year bonds over U.S. notes begins to drop. The currency fell 0.76% against the dollar in January, the most for the month in China Foreign Exchange Trading System records since 2007. The yield gap will narrow to 170 basis points by the end of this year, from 256 on Thursday, according to Bloomberg surveys of economists, signaling a further decline in the Yuan. EUROPE: The European Central Bank will allow the Greek central bank to provide as much as 59.5 billion Euros ($68 billion) in emergency funding for the country’s lenders, a euro-area central-bank official familiar with the decision said. The measure is needed after the ECB shut off a key avenue for Greek banks’ funding on Wednesday, citing doubts that the country’s newly elected government will conclude its aid program. Greek stocks and bonds fell on Thursday after the ECB’s decision to end a waiver on the quality of Greek debt it accepts as collateral. COMMODITIES: Saudi Arabia, the world’s largest crude exporter, cut pricing for March oil sales to Asia, a sign that the desert kingdom is continuing to fight for market share. State-owned Saudi Arabian Oil Co. lowered its official selling price for Arab Light crude by 90cents to $2.30 a barrel less than Middle East benchmarks, the company said in an e-mailed statement Thursday. 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     34.023 Money Market Highlights NIBOR (%) O/N                                 16.4667 30 Days                           14.7779 90 Days                           15.2000 180 Days                         16.6751 LIBOR (%) USD 1 Month                0.1710 USD 2 Months              0.2102 USD 3 Months              0.2561 USD 6 Months              0.3624 USD 12 Months            0.6290 Benchmark Yields Tenor     Maturity     Yield (%) 91d           07-May-15        10.31 182d         06-Aug-15        13.73 364d         21-Jan-16         15.90 2yr            16-Aug-16         15.00 3yr            31-Aug-17         15.33 5yr            23-Oct-19         15.32 Indicative Currency Exchange Rates                           Bid         Offer USDNG         190.00       195.00 EURUSD      1.1354         1.1556 GBPUSD      1.5215          1.5417 USDJPY       117.26         117.29 USDCHF      0.91895      0.9290 GBPEUR      1.3270         1.3474 USDZAR      11.2250      11.4283 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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