A Review of the Nigerian Energy Industry

Financial market products & services update

Investment chart, currency notes and a compass.
Investment chart, currency notes and a compass.

26 March 2015 Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Central Bank of Nigeria (CBN) expressed displeasure on the dollarisation of the naira by politicians, saying that it would soon take action on that. This is as it retained the Monetary Policy Rate (MPR) at 13 per cent with private sector Cash Reserve Requirement (CRR) at 20 per cent while the public sector CRR remained at 75 per cent. It also maintained the banking industry liquidity ratio at 30 per cent. Briefing newsmen immediately after the Monetary Policy Committee (MPC) meeting in Abuja, Governor of CBN, Mr. Godwin Emefiele, spoke against the backdrop of a situation where politicians, schools, landlords and host of others no longer demand for payment in naira but in dollar.

FX: Slight relief yesterday following sale of FX by 3 major oil companies. Over $200m was reportedly auctioned. Yesterday’s CB’s auction closed at 197.00.

FIXED INCOME: Tbill auction prints coming in strong yesterday and was largely expected. Yields cut at 10.99%, 15.63% and 17.43% for 91day, 182day and 364day respectively. In bond secondary trading, selling requests were not in large sizes or so frequent but was quite evident. There was no headline driving this, just a correction of previous overdone levels. Overall, it was a quiet session with a soft tone and same for tbills. O/N rates traded 14% – 15%. OMO maturity today should see CBN try to mop up liquidity with an OMO auction.

USA: US consumer prices rebounded last month as petrol prices rose for the first time since June, official figures show. The Consumer Price Index rose by 0.2% in February, but remained unchanged from a year earlier, the Department of Labor said. The monthly rise follows three consecutive months of declines, including a 0.7% drop in January. Petrol prices rose 2.4% in February, after having fallen by 18.7% in January.

CHINA: A measure of expected swings in China’s yuan declined to a two-month low as depreciation concerns abated after the nation’s leaders pledged to stabilize the currency and boost its global use. The exchange rate will be kept at a reasonable level, Premier Li Keqiang told the country’s top legislature this month, following it up by telling International Monetary Fund Managing Director Christine Lagarde on March 23 that China hopes the yuan will be included in the agency’s Special Drawing Rights. The nation will promote yuan capital account convertibility and the central bank has basically withdrawn from market intervention, State Administration of Foreign Exchange officials said at a press conference in Beijing Thursday.

U.S. crude settled 3.6 percent up at $49.21 a barrel on Wednesday as a weaker dollar, fighting in Yemen and speculative buying boosted prices in spite of U.S. inventories building to record highs for an 11th week.

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                                 14.3750
30 Days                           15.8940
90 Days                           16.7582
180 Days                         17.6973

USD 1 Month                 0.1756
USD 2 Months               0.2215
USD 3 Months               0.2686
USD 6 Months               0.3979
USD 12 Months             0.6972

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           25-Jun-15          14.67
182d         10-Sep-15          15.82
364d        03-Mar-16         15.88
2yr            27-Apr-17          15.79
3yr            29-Jun-19         15.83
5yr            13-Feb-20         15.80

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG        198.67       199.37
EURUSD      1.0925       1.1127
GBPUSD       1.4849      1.5051
USDJPY        118.55       118.58
USDCHF      0.94695    0.9571
GBPEUR      1.3457       1.3661
USDZAR      11.7463     11.9497
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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