A Review of the Nigerian Energy Industry

Financial market products & services update

Investment analysis, Currency notes and a compass.
Investment analysis, Currency notes and a compass.

20 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The total Assets under the Contributory Pension Scheme rose to N4.61tn at the end of the 2014 financial year from N2.05tn in the preceding year. Report on the pension fund portfolio for the period obtained by our correspondent from the National Pension Commission on Thursday showed that the funds, which had maintained a steady growth over the years, were invested in different instruments. Some of the instruments are domestic and foreign ordinary shares, Federal Government of Nigeria securities, state government securities, local money market securities and foreign money market securities.

FX: CBN continued the special auction at 199.00 for same day value and total amount sold yet to be disclosed. The auction’s guidance earlier advised the yesterday’s rate at 195.80/196.80 but was later refreshed to 198.00/199.00. CBN has so far met all presented demand at the auction and it’s believed the trend was sustained – estimate of $620m sold so far since inception last week Friday. Interbank market remained relatively quiet with very scanty activity, few bilateral trades reported at about 199.00.

FIXED INCOME: PFA enquiry on bond gave support to long end bond as we see a few PFAs getting interested but doing trades in trickles. Trades on short end bond; Aug 2016s and Apr 2017s largely biased to sellers. FAAC meeting postponed till next week Monday – reasons still largely unknown.

O/N rates would have spiked on the back of this but the suspension of the RDAS window has given support to O/N rates at 14.86%.

U.S: The rush for Treasuries over German bunds fizzled out this month — even after the U.S. yield premium exploded to the most in a quarter century. Now it’s all about jobs and Janet Yellen.

Holders of U.S. bonds are suffering as a result. Treasuries have plunged 2.4% in February through Thursday, heading for the steepest monthly loss in five years, based on Bank of America Merrill Lynch data. After the U.S. reported job and wage gains for January earlier this month, traders are betting the Federal Reserve that Yellen heads will raise rates around September, based on a Morgan Stanley index.

EUROPE: Germany is leaving the door open to an agreement on Greece’s bailout funding as officials prepare their negotiating positions going into a meeting of finance ministers in Brussels Friday.

German leaders regard a proposal submitted by Greece to fellow euro-region governments as a basis for negotiations and don’t necessarily see a need for Greece to submit a fresh draft, according to a government official who asked not to be named because the discussions are private.

COMMODITIES: Oil trimmed its first weekly decline in a month as U.S. crude stockpiles expanded to a record, adding to a global glut that drove prices lower in the last year. Futures gained as much as 1.4% in New York. Crude inventories climbed to 425.6 million barrels through Feb. 13, the highest level in weekly records compiled by the Energy Information Administration since August 1982.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                 8.20%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     32.432

Money Market Highlights
O/N                                  14.8667
30 Days                           15.1897
90 Days                           15.9815
180 Days                         17.0481

USD 1 Month                0.1735
USD 2 Months              0.2147
USD 3 Months              0.2615
USD 6 Months              0.3841
USD 12 Months            0.6709

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15         14.61
182d         13-Aug-15         14.02
364d         04-Feb-16        23.25
2yr            27-Apr-17         16.64
3yr            31-Aug-17         16.64
5yr            13-Feb-20         16.30

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         195.50      199.50
EURUSD      1.1248       1.5530
GBPUSD       1.5328      1.5530
USDJPY        118.83       118.86
USDCHF      0.94615    0.9563
GBPEUR      1.3494       1.3698
USDZAR      11.5711      11.7745
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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