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.

15 April 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The International Monetary Fund (IMF) has said that the slump in crude oil price will have severe impact on the Nigerian economy as well as other oil producing countries in the continent in 2015. Therefore, given the weaker economic outlook for the continent, the fund revised downward Africa’s projected growth in 2015 to 4.5%, from 5% in 2014.

The IMF stated this in its latest 2015 World Economic Outlook titled: “Uneven Growth: Short- and Long-Term Factors,” released on Tuesday.

FX: CBN’s special auction has been maintained at $/NGN 197.00. Latest published figures show the 30 days moving average gross FX reserves at $29.514bn [$29.789bn as at 31st March 2015].

FIXED INCOME: Yesterday’s bond session was slow for the most part of the day but all bonds witnessed higher demand. T-bill market equally gained some steam as street builds positions ahead of this week’s OMO maturity. All eyes on today’s bond auction.

MARKET MONEY: Since there is no respite for the money market till Thursday when the maturity hits the system, O/N rates traded in the 60% – 90% range before closing at 85%. A total inflow of about N2.117 trillion is expected to hit the money market from the various government maturing securities and Federation Account Allocation Committee (FAAC) this month.

CHINA: China’s economy expanded at the weakest pace since 2009 last quarter, with output, investment and retail data pointing to a deepening slowdown.

Gross domestic product rose 7% in the three months through March from a year earlier, the statistics bureau said in Beijing on Wednesday, matching the median estimate of economists and the leadership’s full-year expansion target. Data for the month of March showed industrial production was weaker than all 40 estimates in a Bloomberg News survey.

U.S: The big hit from the strong dollar is going to fall on small U.S. exporters. While large U.S. multinational corporations have kicked up a storm of complaints about the currency’s advance, their broader customer and production bases make them more nimble and able to cope. For the smaller counterparts with fewer products to offer and most factories in the U.S., it’s becoming more difficult to remain competitive.

The swift and sizeable appreciation of the dollar “is a hard knock for any company, and it’s harder for small exporters,” many of which sell specialty products often less than $1,000 a shipment, said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington. “The short-term outlook is painful.”

COMMODITIES: Oil advanced for a fifth day as Iran joined Libya in calling for the Organization of Petroleum Exporting Countries to reduce production.

Futures climbed as much as 1.8% in New York in the longest rising streak in three weeks. OPEC should cut “at least 5%” of its output quota, Iranian Oil Minister Bijan Namdar Zanganeh said Tuesday. U.S. President Barack Obama agreed to accept compromise legislation after it became clear that Democratic lawmakers would join with Republicans in demanding a say on the nuclear deal with the government in Tehran.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   8.40%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     29.514

Money Market Highlights
O/N                                  90.0000
30 Days                           16.7387
90 Days                           17.6674
180 Days                         18.7366

USD 1 Month                 0.1815
USD 2 Months               0.2273
USD 3 Months               0.2753
USD 6 Months               0.4052
USD 12 Months             0.7034

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           16-Jul-15           14.13
182d         15-Oct-15          14.47
364d        07-Apr-16         15.16
2yr            27-Apr-17         14.52
3yr            30-May-18        14.50
5yr            13-Feb-20         14.47

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         198.70       199.40
EURUSD      1.o505       1.0707
GBPUSD       1.4638       1.4840
USDJPY        119.51       119.54
USDCHF       0.96895    0.9791
GBPEUR       1.3796       1.4000
USDZAR      11.9891     12.1925
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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