A Review of the Nigerian Energy Industry

Financial market products & services update

Currency notes, coins and gold bars.
Currency notes, coins and gold bars.

16 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA Deputy Commissioner (Finance and Administration), National Insurance Commission (NAICOM), Mr. George Onekhena, has said the commission would strengthen its regulatory oversight to ensure that foreign insurance companies operating in the country do not take undue advantage of the cash potentials in the sector.

Speaking in an interview, he noted that a situation whereby portfolio investors would want to take advantage of the monetary benefits of the insurance sector without adding value to the system was becoming a critical issue which the regulator would not lose sight of.

FX: A week after the postponement of the polls over security concerns, we had an already pressured FX market tested further with NGN hitting 206.65 high during the week resulting a nervy CBN reaction. CBN had a special auction on Friday to cater for real client demand. Interbank market did not trade fluidly as a result of the ‘special auction’ with most trades closed bilaterally within a reported 200 range.

FIXED INCOME: Last week closed highly volatile following the new CBN circular which says CRR debit will be fortnightly on an incremental basis from the previous monthly debit. O/N rates closed at 80% area and the strain on liquidity, coupled with funding for Friday’s CBN “Special Auction” intervention caused some panic on Friday in both T-bill and bond market.

CHINA: China, like much of the world, is beefing up monetary stimulus to boost its economy. Yet, unlike its peers, it probably won’t let its currency depreciate to help.

Sustained weakness in the Yuan would make it more expensive to repay the $1.1 trillion of debt the Bank for International Settlements estimates is owed by Chinese companies. As a result, China has to offset interest-rate cuts and other easing measures with steps to curb the Yuan’s 2.9% slide from its peak about a year ago.

EUROPE: The euro gained as talks on Greece’s debt resumed. The euro strengthened 0.2% by 7:17 a.m. in London as futures on the Euro Stoxx 50 Index were little changed.

The euro bought $1.1415. Greek Finance Minister Yanis Varoufakis leads a delegation back to Brussels, buoyed by a demonstration in support of the government’s policy by 20,000 people in Athens. While Euro-area countries will discuss Greece’s debt levels, “it is out of the question to cancel the debt, we can discuss its maturity,” French Foreign Minister Laurent Fabius, told Europe 1 radio on Sunday.

COMMODITIES: Oil held gains after a third weekly advance as U.S. companies slowed drilling and Libya’s state oil company threatened to halt the African nation’s production.

Rising U.S. supply is contributing to a global surplus that drove prices almost 50% lower in 2014. The recovery this year is partly due to a drop in net short positions and a rebound in London-traded Brent futures will stall, predicted Qatar National Bank QSC, the biggest Arab lender.

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     33.181

Money Market Highlights
O/N                                 76.5833
30 Days                           15.9765
90 Days                           17.1772
180 Days                         17.9082

USD 1 Month                0.1730
USD 2 Months              0.2120
USD 3 Months              0.2571
USD 6 Months              0.3824
USD 12 Months            0.6736

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           14-May-15        13.52
182d         06-Aug-15       13.69
364d         04-Feb-16        18.96
2yr            16-Aug-16        17.35
3yr            31-Aug-17        16.13
5yr            23-Oct-19         17.45

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG          N/A           N/A
EURUSD      1.1312        1.1514
GBPUSD       1.5335      1.5537
USDJPY       118.65       118.68
USDCHF      0.92535    0.9355
GBPEUR      1.3422       1.3626
USDZAR      11.5621     11.7655
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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