A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

26 February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Africa’s richest man, Alhaji Aliko Dangote, has allayed concerns over the Nigerian economy brought on by declining oil revenue and political uncertainty over the elections, stating that the country is strong and will bounce back.

He said the Nigerian economy was simply passing through a temporary setback owing to low commodity prices, but expressed confidence that the country has the capacity to emerge stronger in a few months.

FX: Interbank market remains illiquid and trading on a bilateral basis. Market is still very bid as CBN continue to meet far less than presented demand at the daily special auction. Yesterday’s oil Major bid of over $100m reportedly closed above 204 despite bilateral interbank level being sub 202. Very likely we see a spike in interbank levels from today as market scramble to meet the client’s demand unmet by CBN.

FIXED INCOME: Yesterday, buyers of risk outnumbered sellers of risk in bond trading (not surprising though). While PFA demand from smaller administrators are in trickles, the bigger players appear to still be on the sidelines. T-bill auction next week Wednesday on offer will be NGN 17.85bn of the 91day, NGN 50bn of the 182day and NGN 187.12bn of the 364day paper.

MARKET MONEY: The money market remains tight with O/N rates at 35%. Although not officially communicated, CBN is turning down banks who wish to access the SLF window when they request for CBN FX intervention funds. The expected FAAC is expected to support liquidity.

CHINA: China’s Yuan traded within 0.02% of the weak end of its trading band amid speculation the central bank will ease monetary policy further to support the economy.

Data released Wednesday that suggested manufacturing picked up this month may have been distorted by the Feb. 18-24 Lunar New Year holiday and an interest-rate cut is still likely in the first quarter.

INDIA: Swings in India’s rupee declined to the lowest since mid-December after the Federal Reserve signalled U.S. interest rates may not rise before mid-2015.

The rupee’s one-month implied volatility, used to price options, slumped 53 basis points to 6.58% as of 11:35 a.m. in Mumbai, data compiled by Bloomberg show. The gauge dropped for a fourth day and is headed for its lowest close since Dec. 15. In the spot market, the rupee was little changed from Wednesday at 61.9650 a dollar.

COMMODITIES: Gold extended a rally from a seven-week low as Chinese buyers returned from a week-long holiday and investors assessed the outlook for the Federal Reserve raising interest rates in the U.S. before inflation data. Bullion for immediate delivery rose as much as 0.7% to $1,213.23 an ounce and was at $1,212.37 at 2:29 p.m in Singapore.

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     31.681

Money Market Highlights
O/N                                  35.9583
30 Days                           15.4071
90 Days                           16.4797
180 Days                         17.3581

USD 1 Month                0.1720
USD 2 Months              0.2140
USD 3 Months              0.2609
USD 6 Months              0.3829
USD 12 Months            0.6686

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15         14.31
182d         13-Aug-15         15.54
364d         18-Feb-16         16.09
2yr            27-Apr-17         16.37
3yr            30-May-18       16.24
5yr            13-Feb-20         15.98

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG           N/A          N/A
EURUSD      1.1270       1.1471
GBPUSD       1.5435      1.5637
USDJPY        118.92       118.95
USDCHF      0.94255    0.9527
GBPEUR      1.3536       1.3767
USDZAR      11.3339      11.5373
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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