A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

24 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: In a move to avert a looming scarcity of petroleum products in the country, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, on Monday met with the Chief Executive Officers of Oil Marketing and Trading (OM and T) companies in Lagos.

The protracted meeting, it was learnt, which lasted from noon till late in the evening was held at the Eko Hotel behind closed doors to find solutions to the threats by the banks and marketers to stop financing and importing products, respectively.

FX: Interbank market still trading on an order basis and extremely illiquid. CBN’s special intervention window continued yesterday with the day’s level earlier advised as 197/198 and sales reportedly closed at 199. An oil major offered an estimated $50m with the auction reportedly closing above 198.80. Interbank market traded slightly above 200 today.

This week opened on a firm foot with buyers in the bond space. Mixed bag in the T-bill space with demand on the long end but sell off witnessed on the short end. Most of the price action yesterday was before midday and quiet thereafter.

Over Night rates still ranging 18%-19.5%. FAAC meeting held yesterday and funds are expected to be disbursed sometime during the week. The impact of the CRR alteration and other systemic outflows for RDAS intervention, OMO auctions put a further strain on market liquidity.

U.S: The U.S. Justice Department is investigating whether the world’s biggest banks manipulated prices of precious metals such as silver and gold, according to people familiar with the matter.

At least 10 banks are being probed by the Justice Department’s antitrust division. The metals investigation, which is in the early stages, broadens the Justice Department’s ongoing scrutiny of banks over manipulation of financial benchmarks. Prosecutors are conducting criminal investigations into the alleged rigging of interbank lending rates and currency markets.

INDIA: India’s 10-year sovereign bond yield was near a three-week low on optimism the government will meet its goal of narrowing the fiscal deficit as it presents the federal budget this week.

Prime Minister Narendra Modi’s administration, which will announce the budget on Feb. 28, has pledged to cap the fiscal shortfall at a seven-year low of 4.1% of GDP in the year ending March 31. Its ability to sustain fiscal consolidation will have a bearing on the Reserve Bank of India’s decisions to ease monetary policy.

COMMODITIES: Oil extended its slide below $50 a barrel before U.S. government data forecast to show crude inventories expanded from a record high in the world’s biggest consumer. Futures fell as much as 1.2% in New York for a fifth day of declines, the longest losing streak since August. Crude stockpiles probably rose by 3.75 million barrels last week.

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     32.306

Money Market Highlights
O/N                                  19.5417
30 Days                           15.2535
90 Days                           16.3080
180 Days                         17.1055

USD 1 Month                0.1710
USD 2 Months              0.2130
USD 3 Months              0.2616
USD 6 Months              0.3847
USD 12 Months            0.6784

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15         14.73
182d         13-Aug-15         15.41
364d         18-Feb-16        16.26
2yr            27-Apr-17         16.48
3yr            30-May-18       16.34
5yr            13-Feb-20         16.09

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         195.50      199.50
EURUSD      1.1256       1.1428
GBPUSD       1.5354      1.5556
USDJPY        119.25       119.28
USDCHF      0.94485    0.9550
GBPEUR      1.3542       1.3746
USDZAR      11.5513      11.7547
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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