A Review of the Nigerian Energy Industry

Financial market products & services update

Currency notes, coins and gold bars.
Currency notes, coins and gold bars.

13 March 2015, Sweetcrude, Lagos – Local and international financial markets products & services update.
NIGERIA: According to latest survey released by New York based financial newswire service, Bloomberg, Africa’s largest economy Nigeria has been ranked among 20 fastest growing economies in the World. Leading online shopping community Kaymu.com.ng has attributed Nigeria’s listing to the upshot of e-commerce in the country. In an accompanying chart by Bloomberg, Nigeria with an expected growth rate of 4.9% was ranked sixth behind China (7%), the Philippines (6.3%), Kenya (6%), India (5.5%) and Indonesia (5.4%). Managing Director of Kaymu, Evangeline Wiles, in a statement released by the company, said, “Nigeria’s e-commerce space is the fastest growing in Africa contributing a monthly spend of 1.3bn to the Nigerian retail sector. The role the retail sector plays in driving Nigeria’s economy cannot be overemphasized as a country’s purchasing power is a major driver of the economy”. The explosion of the E-commerce space in the last two years has fuelled a massive consumer behavioral change. E-commerce in Nigeria records over $2m worth of transactions per week and close to 1.3bn per month from the 38% of Nigerians who prefer to buy products through the internet, according to a survey conducted by Philip Consulting.

FX: Some reprieve on liquidity in last two days as the much anticipated sale from the state owned oil company estimated at over $350m materialised late yesterday. Impact of the foregoing was however muted, as most participating banks used their winnings to fill long outstanding client demand. Offshore investors and petroleum product marketers continue to be reportedly prioritised at CBN’s special auctions while expectations on any significant fill of demand by CB in near term remain subdued in light of recent trend and FX reserves MA skirting around the $30bn psychological level. Day’s interbank traded range was 196.00-199.50, with CB’s rate maintained at 196/197.

FIXED INCOME: Hectic day on bonds, chunky volumes traded with market opening +50-60bps wider on the benchmark bonds offered at the previous day’s auction to reflect the auction stop rates. March 2024s undoubtedly the outperformer. Opening 16.85% area and closing 16.67% most of the price action seen likely on the back of PFA demand. Short end of the bond curve was a bit sidelined (Aug 2016s and Apr 2017s). Better buyers also in the tbill space with NGN240bn OMO bills maturing yesterday. OMO auction yesterday on the back of the maturing tbills but only NGN61.37bn was sold with stop rate unchanged. Street appetite for OMO bills unchanged with liquidity managers happy to remain long NGN in the money market. O/N rates ranged 14% to 15% – higher yesterday due to CRR debit but whisper is that actual debit from the system is likely to be insignificant.

COMMODITIES: Oil headed for the longest stretch of weekly declines in almost two months amid signs that a global supply glut will expand. Futures were little changed in New York after falling 2.3 percent on Thursday to a six-week low. Iran is in talks with buyers in Asia to sell more crude if sanctions on the Middle Eastern country are lifted, according to four people with knowledge of the discussions.

CHINA: Central banks are selling Treasuries at a time when almost everyone else is piling into them. Monetary authorities outside the U.S. cut their Treasuries held in custody at the Federal Reserve to the lowest level in almost a year. Why? One theory starts with the record-setting rally in the dollar. To protect their own foreign-exchange rates, central banks are selling some of their holdings, exchanging the dollars and bringing the proceeds home.

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                                  14.7750
30 Days                           16.0805
90 Days                           17.1946
180 Days                         18.1202

USD 1 Month                 0.1760
USD 2 Months               0.2195
USD 3 Months               0.2690
USD 6 Months               0.4041
USD 12 Months             0.7151

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           21-May-15         15.22
182d         03-Sep-15         15.70
364d         18-Feb-16         16.12
2yr            27-Apr-17         16.36
3yr            30-May-18       16.35
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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