A Review of the Nigerian Energy Industry

Financial market products & services update

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

10 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: As oil and gas industry operators contend with the non-passage of the Petroleum Industry Bill (PIB), which has created uncertainty in the operating environment, the political tension associated with the 2015 general elections is also taking heavy toll on investment in the industry.

Oil industry sources, hinted at the weekend that both local and foreign investors are having a re-think on their investment plans for 2015 as threats by the various actors in Nigeria’s politics have created post-election uncertainty, instilling fears in the minds of operators.

FX: NGN weakened further yesterday, losing about 2 big figures within minutes of the day’s trading session; a panic reaction to the postponed polls announced over the weekend as concerns over CBN’s ability to tame the pair with further southward pressure on FX reserves lingers. CBN’s presence late in the day’s trading session yet again failed to effect any major correction. The Pair closed at 196.40/50.

CBN sold $199.99 mio at Yesterday’s RDAS (offering $200 mio) with marginal rate maintained at 169.68(1% commission inclusive).

FIXED INCOME: Surprise OMO auction yesterday saw total sales of NGN 28bn clearing at stop rate of 15.74% yield. Money market continues to be very tight with O/N rates quoted at 37% yesterday. Market opened NGN 64.5bn long and RDAS funding will take out more cash from the system.

CHINA: China’s stocks rose the most in a week as official data showing inflation slowing more than forecast spurred speculation the government will further ease monetary policy to boost the world’s second-biggest economy.

Property and consumer-discretionary companies led gains as Poly Real Estate Group Co. and Qingdao Haier Co. advanced more than 2%. Beijing Yanjing Brewery Co. jumped the most since November 2013 after people with knowledge of the matter said the company plans to sell a stake to a foreign investor.

INDIA: India’s rupee rebounded from the weakest level in almost four weeks as a drop in the price of oil bolstered optimism the current account will return to surplus.

Brent crude fell 1.4 % Tuesday, snapping a three-day rally. Its 49% decline since June has reduced costs for India, which imports around three-quarters of its oil. Morgan Stanley forecasts a current-account surplus of $1.5 billion in the fiscal year starting in April, which would be the first excess in the broadest measure of trade since 2004.

COMMODITIES: Oil fell for the first time in four days amid speculation that U.S. supply will continue to exacerbate a global glut. Futures dropped as much as 1.6% in New York. U.S. Production of oil from hard-to-penetrate rock formations will expand to 5.2 million barrels a day by the end of this decade from about 3.6 million a day last year, the International Energy Agency said on Tuesday. The United Steelworkers union and Royal Dutch Shell Plc will resume negotiations to try and end the biggest U.S. oil-worker strike since 1980.

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     34.789

Money Market Highlights
O/N                                 37.5433
30 Days                           15.7171
90 Days                           16.2307
180 Days                         17.2353

USD 1 Month                0.1722
USD 2 Months              0.2112
USD 3 Months              0.2583
USD 6 Months              0.3734
USD 12 Months            0.6560

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           07-May-15        11.14
182d         06-Aug-15        12.86
364d         21-Jan-16         16.01
2yr            16-Aug-16         15.18
3yr            31-Aug-17         15.47
5yr            23-Oct-19         15.40

Indicative Currency Exchange Rates
                          Bid         Offer
USDNG         193.00       199.00
EURUSD      1.1230        1.1432
GBPUSD       1.5145        1.5347
USDJPY       118.72         118.75
USDCHF      0.91895      0.9291
GBPEUR      1.3353         1.3557
USDZAR      11.4688      11.6722
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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