A Review of the Nigerian Energy Industry

Financial market products & services update

Currency notes, investment analyses and a compass.
Currency notes, investment analyses and a compass.

10 March 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: In an apparent bid to maintain the tight money supply and high interest rate regime in the country, the CBN is set to mop up N2.17 trillion from the economy through sales of government securities. This represents 170 percent increase when compared with the N1.2 trillion withdrawn from the economy through the sales of government securities from December 12th to the first week of this month. This emerged from the government securities programme for the second quarter of the year released by the apex bank on Friday. The programme, which would run from March 19th to June 4th, revealed that the CBN would sell N945.51 billion worth of secondary market (open market operation) treasury bills and N995.49 billion worth of newly issued (primary market) treasury bills

FX: Very few offers seen yet again in bilateral trading yesterday – market remained extremely illiquid and bid. We had another partial fill at yesterday’s special auction at CB’s advised offer of 197.00 – (estimate <$50m). Market hopes for some respite from an expected significant inflow from the state owned oil major this week (> $300m) to buoy market liquidity. Though there are rumours the flow could go directly to the CBN and would only filter through the special intervention. Not much expected to change till the oil major sales materialise.

FIXED INCOME: Not much momentum in the bond market ahead of the bond auction scheduled for Wednesday and as expected, a dovish trend characterized yesterday’s trading activities as most bonds were well offered. Treasury bills market tried to widen before the OMO auction results but failed after the stop rates came out unchanged at 14.85% discount (16.014% yield). OMO participation remains anaemic. As at close, FGN Bond yields closed 9bp higher while treasury bills yields closed about 10bp lower. O/N rates traded a range of 12- 12.50%.

COMMODITIES: Brent Crude gave up most of its early gains and steadied above US$58.50 a barrel on Tuesday, supported by data showing annual consumer inflation in top energy consumer China recovered last month while a firmer dollar kept a lid on prices. China, which is battling growing deflationary pressures, saw consumer inflation rise 1.4% in February, beating the 0.9% gain estimated by analysts. A slide in producer prices, however, underscored the deepening weakness in the economy

US: The dollar extended gains, trading at a more than seven-year high versus the yen and the strongest in 11 years against the euro, amid speculation the U.S. will bring forward interest-rate increases. Chinese shares fell with copper after the nation’s producer prices plunged.

CHINA: The world-beating surge in Chinese brokerages is reversing as short sellers increase bets against the stocks and investors speculate regulatory changes will erode earnings. Securities firms in China with market value of at least $1 billion have dropped about 15% on average this year, after more than doubling in 2014.

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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