A Review of the Nigerian Energy Industry

Financial market products & services update

Financial chart, currency notes and a compass.
Financial chart, currency notes and a compass.

27 February 2015, February 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The CBN on Thursday refuted the news making the rounds that it is planning to convert Nigerian bank customers’ foreign currency domiciliary account deposits (USD or GBP) into the Naira.

The Director, Corporate Communications, CBN, Mr. Ibrahim Mu’azu, who said this in a statement last night insisted that the rumour was untrue.

He said: “The CBN wishes to refute this rumour in the strongest possible terms. This story is categorically and completely untrue and has no basis whatsoever in the Bank’s pronouncements or plans. The CBN has never contemplated such an action and has no intention to do so”.

FX: Further uptick in interbank levels seen yesterday with spot reportedly trading 204-205 level at some point intraday. Market remains highly illiquid with still few bilateral trades reported in the 197-205 range. CBN’s special auction yet again closed without much sales reported after maintaining their level at 197/198 and re-emphasising need for more interbank trading as the dip in traded volumes persists. With two way quotes still inaccessible, market liquidity is not expected to improve.

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 Federal Accounts Allocation Committee (FAAC) came into the system late Thursday evening, (approximately NGN234bn) we expect to see O/N rates sub 11% today.

CHINA: The Yuan dropped to the weakest level in more than two years as China’s central bank cut its reference rate by the most in a month.

The currency fell as much as 0.18% to 6.2699 a dollar in Shanghai, the lowest since October 2012. It traded within 0.03% of the lower end of its permitted trading band for the fifth day in a row, and might depreciate more sharply if policy makers loosened control of the exchange rate.

INDIA: Rupee headed for its biggest weekly gain in a month after the Federal Reserve signalled it won’t raise U.S. interest rates in the first half. Higher U.S. rates will damp demand for assets in emerging markets like India, which has seen global funds pour $8.8 billion into local debt and equities this year. Indian bonds fell this week on concern the government will project an increase in borrowing in Saturday’s federal budget.

COMMODITIES: Global oil headed for its biggest monthly gain since 2009, trading at the steepest premium in more than a year to U.S. crude prices weighed down by record domestic supply.

Brent, the benchmark for more than half the world’s oil, is climbing amid speculation that global demand will recover this year.

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     31.575

Money Market Highlights
O/N                                  28.1667
30 Days                           15.6453
90 Days                           16.4232
180 Days                         17.3752

USD 1 Month                0.1719
USD 2 Months              0.2145
USD 3 Months              0.2616
USD 6 Months              0.3783
USD 12 Months            0.6693

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15         15.21
182d         03-Sep-15         15.40
364d         18-Feb-16         16.43
2yr            27-Apr-17         16.45
3yr            30-May-18       16.20
5yr            13-Feb-20         15.88

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG        198.50       205.10
EURUSD      1.1113        1.1375
GBPUSD       1.5340      1.5542
USDJPY        119.15       119.18
USDCHF      0.94455    0.9547
GBPEUR      1.3667       1.3871
USDZAR      11.4384     11.6418
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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