A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

11 March 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The CBN, on Monday rejected some proposed amendments to give the Nigeria Deposit Insurance Corporation, NDIC, more powers. A bill currently before the Senate seeks to give more powers to the NDIC to allow the body serve as a parallel regulator for banks, alongside the CBN. The proposed amendments also seek to confer conflicting supervisory functions and powers on NDIC over banks as well as create overlapping regulatory responsibilities for the corporation. Some of the powers include those that would ensure that applicants for banking licenses simultaneously submit to the CBN and the NDIC such applications for processing. Such an arrangement, the NDIC said, was to ensure that it determined whether or not deposit insurance status would be granted to the bank, if and when licensed.

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

FIXED INCOME: Overall, great momentum from start of yesterday’s trading till close. Both tbill and bond markets opened on a firm foot as market players made good their resolve to trade within agreed standard bid/offer spreads after a market wide agreement was reached the previous day. Volumes improved significantly on long end tbill with the outperformer being 03 Dec 15 tbills with NGN34bn traded. Bonds were not left out with July 2034s leading the way with NGN3.5bn traded (well bid). Ripple effect from the 2034s was felt across the rest of the bond curve were there had been betters sellers most of last week and yesterday. OMO auction unchanged – different maturity, same weak theme and stop rate unchanged. O/N rates traded 12% – 12.50% with liquidity opening NGN200bn long.

COMMODITIES: Brent crude traded near a one-month low after erasing this year’s gains while oil in New York held losses before government data that may signal the pace of supply growth in the U.S. Futures were 0.3 percent higher in London after declining 3.7 percent on Tuesday, while West Texas Intermediate stayed below $50 a barrel for a second day.

CHINA: China reports lower-than-expected output, investment data. The latest economic data suggests continued downward pressure on China after worse-than-expected figures for industrial activity and investment were released for the first two months of 2015. Industrial output in the world’s second largest economy grew 6.8 percent year on year in January-February, down 1.1 percentage points compared to growth for December, the National Bureau of Statistics (NBS) announced Wednesday. Growth has undershot market estimates of 7.7 percent. “It also fell short of our estimate of 8 percent,” said Bob Liu, an analyst with China International Capital Corp. (CICC), who cited weakened domestic demand as the key cause.

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                                  13.1283
30 Days                           15.8352
90 Days                           16.8264
180 Days                         17.8427

USD 1 Month                0.1765
USD 2 Months              0.2170
USD 3 Months              0.2660
USD 6 Months              0.4041
USD 12 Months            0.7111

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15         15.24
182d         03-Sep-15         15.70
364d         18-Feb-16         15.50
2yr            27-Apr-17         16.45
3yr            30-May-18       16.31
5yr            13-Feb-20         16.10

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG        199.10       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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