A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

25 March 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
FX: CBN’s special auction rate was maintained at 197.00 yesterday. Tuesday’s reported range was 196.00-199.00. Amount sold yesterday is yet to be ascertained but likely in line with recent trend ($30m-$50m).
No oil company sales activity yesterday to provide any relief to the interbank market that remains extremely bid. Seen about $150m of oil company flows this morning MPC meeting was concluded yesterday with no change in all policy parameters. The Central bank governor pledged to clamp down on increasing dollarization of the economy.

FIXED INCOME: Another healthy OMO auction on Tuesday saw the 182day paper (24 Sep 15) to be issued at today’s primary auction on offer. N108.832 billion was sold with stop rate maintained at. We expect a lacklustre demand at today’s 182-day primary auction and this might see an increased sale by the CBN on the 364-day paper to make up for it. T-bill auction today should still see prints coming in lower than last cut-off following the price action of the last three days. Bonds opened tighter and traded a wide range following Monday’s release of the Q2 bond auction calendar. June 2019s and Jan 2022s recorded the most swings. March 2024s traded at 15.20% yesterday (some profit takers taking advantage of the illiquid paper and even trading lower than that). Even with a soft tone emerging by mid-day, we still closed firm. Money market liquidity opened NGN250billion long with O/N rates at 11%.

NIGERIA: Following its two-day meeting, the MPC of the Central Bank of Nigeria left the monetary policy rate and all other policy instruments unchanged from the previous meeting. The decision for an unchanged policy stance (MPR at 13.00%) comes only a few days ahead of the 28 March election and was unanimous. The Committee noted that it wanted time for previous tightening measures to “fully permeate the economy”.

USA: Global bonds followed Treasuries higher, the dollar fluctuated and gold retreated before data on U.S. durable-goods orders. European equity-index futures dropped and Shanghai stocks snapped their longest winning streak in almost23 years. The yield on 10-year German bunds retreated two basis points to 0.22 percent by 7:18 a.m. in London, after the rate on similar U.S. bonds plunged more than 9bp in the previous three days

COMMODITIES: Just as Wall Street says the U.S. is running out of room to store oil, it turns out there’s another 20m barrels of empty space. Where? Right at the top of the tanks.

A supply glut has dragged U.S. crude for May delivery almost $10 a barrel below contracts a year out.

CHINA: Chinese stocks retreated for the first time in 11 days, with the benchmark Shanghai gauge ending its longest winning streak since 1992, amid concern the slowing economy is hurting earnings growth.

Utilities and financial companies led declines as Huaneng Power International Inc. slid 2.9 percent after earnings missed estimates, while Agricultural Bank of China Ltd. lost the most in two weeks after posting a decline in fourth-quarter profit. Bank of China Ltd. fell 3.2 percent before earnings Wednesday.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   8.4%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     30.077

Money Market Highlights
O/N                                  10.6233
30 Days                           15.4993
90 Days                           16.4602
180 Days                         17.3640

USD 1 Month                 0.1727
USD 2 Months               0.2205
USD 3 Months               0.2693
USD 6 Months               0.3986
USD 12 Months             0.6924

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           25-Jun-15         14.21
182d         10-Sep-15         15.76
364d        03-Mar-16        16.52
2yr            27-Apr-17         15.71
3yr            29-Jun-19        15.58
5yr            13-Feb-20        15.59

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG        196.00       199.40
EURUSD      1.0855       1.1057
GBPUSD       1.4775       1.4977
USDJPY        119.63       119.66
USDCHF      0.95345    0.9636
GBPEUR      1.3476       1.3680
USDZAR      11.6774     11.8808
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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