A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

11 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Nigerian equities market extended its losses for the second day this week as investors continued to adopt cautions trading following the shift of general elections by six weeks. The market had dipped the previous day after the shift in the elections, thereby extending anxiety among investors.

At the close trading yesterday, the market recorded another decline with the Nigerian Stock Exchange ASI, shedding 0.80 % to close at 29,125.69, while market capitalisation shed N78.4 billion to close at N9.718 trillion.

FX: The bearish NGN sentiments continued yesterday with USDNGN touching a 200.15 intraday high, closing at about 200.00, another record low for NGN. Pressure persisted despite attempted correction by CBN, starting yesterday’s intervention very early into the day’s session with an estimate of over $150 mio sold. Yesterday’s price action triggered an early close of standard 2-way quotes market after the pair tested the implied 2% intraday capped depreciation agreed with FMDA (yesterday’s level being 200.28). Market Closed 199.90/00.

FIXED INCOME: Nigeria continues to trade with a weak tone. Market well offered on the back of the FX move and so the yield curve continues to underperform with bonds 20bps wider and T-bills 35bps wider. PFAs have remained on the sidelines for a bit now. Upward pressure on local yields likely to persist in the weeks ahead and we expect much higher stop rates at the bond auction today to reflect this.

CHINA: China’s plan to broaden its ability to review incoming foreign investments for national-security threats is fueling concern the move will add a layer of scrutiny for global companies expanding in the world’s second-largest economy.

The American Chamber of Commerce in China is preparing to voice concerns over the strengthened national-security measures, according to a draft of the Chamber’s response to the government’s proposed Foreign Investment Law. The trade group will also seek further clarification on various parts of the regulations.

INDIA: India’s rupee retreated to a one-month low as the prospects of an early increase in U.S. interest rates boosted demand for the greenback.

The rupee dropped to 62.2975 a dollar, the weakest since Jan. 9, according to prices from local banks compiled by Bloomberg. It was at 62.18 as of 10:26 a.m. in Mumbai, little changed from Tuesday. Three-month offshore non-deliverable forwards fell 0.2% to 63.12. Forwards are agreements to buy or sell assets at a set price and date, and non-deliverable contracts are settled in dollars.

COMMODITIES: The oil market is slightly oversupplied, making another downward move possible in the first half before supply and demand balance in the last six months of the year, Ian Taylor, chief executive officer of Vitol Group, said Tuesday. There are no signs of slowing U.S. output even as the country’s drillers idle rigs, he said. Oil is trading amid the highest volatility in six years as U.S. stockpiles continued to expand.

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     33.518

Money Market Highlights
O/N                                 65.9600
30 Days                           15.5705
90 Days                           16.4186
180 Days                         17.0817

USD 1 Month                0.1717
USD 2 Months              0.2112
USD 3 Months              0.2581
USD 6 Months              0.3768
USD 12 Months            0.6636

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           14-May-15        13.61
182d         06-Aug-15       12.46
364d         21-Jan-16        16.51
2yr            16-Aug-16        15.49
3yr            31-Aug-17        15.63
5yr            23-Oct-19         15.56

Indicative Currency Exchange Rates
                          Bid         Offer
USDNG         196.00       203.00
EURUSD      1.1207        1.1409
GBPUSD       1.5135        1.5337
USDJPY       119.68         119.71
USDCHF      0.92215      0.9291
GBPEUR      1.3372         1.3576
USDZAR      11.6406      11.8440
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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