A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

09 March 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Amidst fears over the health status of banks and the effect of prolonged decline on oil prices and repeated Naira devaluation, the CBN on Sunday, in a statement reassured that the nation’s banking sector is healthy. The reassurance despite the depression in the global economy, the statement said, follows a “recent top-down stress tests of Deposit Money Banks (DMBs) carried out by the apex bank. The assurance is also coming against the backdrop of a recent analysis by Standard & Poors, a global rating agency that the nation’s banks are the most exposed (directly or indirectly) the oil sector as a percentage of total loan portfolio. While Nigerian banks average nearly 20 per cent, according to S&P, those in Kazakhatan have less than five per cent, just like Malaysia, Bahrain, United Arab Emirates, Kuwait and Saudi Arabia, while Oman has about five per cent. The CBN said it has directed banks to put effective risk management system in place, particularly price hedging, adding that it would continue monitoring to “ensure sufficient internal retention of capital to serve as buffers.”

FX: Interbank market remained extremely illiquid and bid with very few offers seen in friday’s session. Range seen today was 197.00-199.50; CBN’s special auction closed at 197.00.

FIXED INCOME: All MDAs (govt agencies) had been given until Feb 28th to close their accounts with commercial banks. As of Friday, debit from the commercial banks has still not happened. Money market opened NGN260bn long with O/N rates ranging 11% – 12.50%. Nigeria bonds closed firm with some modest buying seen. Some PFA demand seen on the March 2024s. Seeing offers on July 34s at 16% handle (as the auction draws nigh) but nothing was traded so far. Small offshore interest on the Jan 2022s. CBN released T-bills calendar for Q2 and from this a total of NGN945.524bn would mature in the period and total amount to be offered is NGN995.524bn which is just 50bn more.

COMMODITIES: Brent fell towards %59 a barrel on Monday as a promising U.S. jobs report pushed the dollar up, offsetting geopolitical tensions and the threat of output cuts in Libya and Iraq. Brent eased 13 cents to $59.60 by07:22 GMT after dropping 75 cents in the previous session.

CHINA: China must establish a system to record and restrict e-commerce firms that break rules on counterfeit goods, said the chief of the country’s commercial regulator on Monday, responding to a question on the sale of fakes on Alibaba Group Holding Ltd’s websites. The cost of breaking existing rules about selling counterfeit goods online is too low, said Zhang Mao, head of the State Administration for Industry and Commerce (SAIC), at a news conference during China’s annual parliamentary session in Beijing.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                 9.97%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     30.969

Money Market Highlights
O/N                                  11.7933
30 Days                           15.4339
90 Days                           16.8289
180 Days                         17.7090

USD 1 Month                0.1750
USD 2 Months              0.2165
USD 3 Months              0.2646
USD 6 Months              0.3971
USD 12 Months            0.6881

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15         15.15
182d         03-Sep-15         15.72
364d         18-Feb-16         15.48
2yr            27-Apr-17         16.40
3yr            30-May-18       16.31
5yr            13-Feb-20         16.06

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG        198.10       199.90
EURUSD      1.0913       1.1115
GBPUSD       1.5122      1.5324
USDJPY        120.11       120.14
USDCHF      0.97045    0.9806
GBPEUR      1.3720       1.3924
USDZAR      11.6938     11.8972
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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