A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

18 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Ministry of Power on Tuesday disclosed that all things being equal, power generation this year will rise to 6,000 megawatts.

Making this disclosure during the ministry’s defence of its 2015 budget before the Senate Committee on Power, the Permanent Secretary, Dr. Godknows Igali, said the only threat to the attainment of this goal would be persistent vandalism of gas pipelines as he lamented how the commitment of the power sector has consistently been frustrated by vandals.

FX: The interbank market remains on an order driven basis. Few trades were closed bilaterally with 2 way quotes still not accessible. Yesterday’s range was in the 197.00-203.50 range with considerable drop in interbank volumes. CBN’s special auction continues today.

Yesterday’s intervention volume is undisclosed but CBN has reportedly met all eligible demand presented at the special auctions so far with an estimated $480 mio sold as at yesterday since inception last week Friday.

FIXED INCOME: Market closed yesterday on a firm footing. Mostly local buyers seen with rates looking somewhat attractive. Monday’s inflation print had no effect in the secondary market. Money market opened NGN 29.124 billion long but we saw O/N rates close lower on the back of some RDAS refund to banks. T-bill secondary market saw better buyers on some maturities (21 May 2015 in particular).

CHINA: Global investors are wary of Chinese local government debt just as the nation’s provinces start going overseas for fundraising amid state scrutiny.

China has mobilized about 50,000 auditors to probe local government debt, according to Mizuho Securities Asia Ltd., after borrowings swelled to 17.9 trillion Yuan ($2.9 trillion) as of June 2013, from 10.7 trillion Yuan at the end of 2010. Funding arms for the nation’s bridges, sewage systems and roads sold the least onshore Yuan notes in 17 months in January, following moves by the State Council in October to cap the amount of debt regional authorities can take on.

INDIA: A gauge of expected swings in India’s rupee dropped to a three-week low on optimism the nation’s improving economic outlook will attract more inflows.

One-month implied volatility, used to price options, fell five basis points, or 0.05% point, to 7.47% as of 10:57 a.m. in Mumbai, data compiled by Bloomberg show. That’s the lowest level since Jan. 29. In the spot market, the rupee declined 0.2% from Monday to 62.2850 a dollar. It has climbed 1.2% in 2015, the best performance in Asia.

COMMODITIES: Oil fell for the first time in four days before U.S. government data forecast to show crude inventories increased further last week from a record level. Futures dropped as much as 0.9% in New York. Rising U.S. supplies are contributing to a global glut that drove prices almost 50% lower in 2014.

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     32.661

Money Market Highlights
O/N                                 93.1250
30 Days                           17.0148
90 Days                           18.1363
180 Days                         19.0293

USD 1 Month                0.1730
USD 2 Months              0.2135
USD 3 Months              0.2562
USD 6 Months              0.3809
USD 12 Months            0.6726

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15        15.38
182d         13-Aug-15         15.01
364d         04-Feb-16        18.22
2yr            27-Apr-17         16.15
3yr            31-Aug-17         16.17
5yr            13-Feb-20         16.06

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         196.00      199.00
EURUSD      1.1287        1.1489
GBPUSD       1.5246       1.5448
USDJPY       119.23         119.26
USDCHF      0.93355      0.9437
GBPEUR      1.3374         1.3578
USDZAR      11.6339      11.8373
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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