A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

16 April 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has proposed that the incoming government to be led by Major-General Muhammadu Buhari (rtd) consider selling down its majority stakes in joint ventures with multinational oil companies to shore up state finances and raise funding for infrastructure development.

According to the UK-based Financial Times (FT) newspaper, Emefiele has asked CBN officials to evaluate how much could be raised if the state-owned Nigerian National Petroleum Corporation (NNPC) substantially reduced its 55% equity in the joint ventures — with Royal Dutch Shell, Chevron, ExxonMobil, Total and ENI — which pump about half of Nigeria’s two million barrels a day of oil production.

FX: Yesterday’s special auction closed with intervention rate maintained at $/NGN 197.00. CBN has released a circular reducing spending limit on Naira Debit Cards offshore to $50,000 p.a from previous $150,000 limit, while daily limit has been pegged at $300.

FIXED INCOME: At the bond auction yesterday, the DMO sold NGN70 billion across the 5year, 10year and 20year bonds printing at 14.449%, 14.2249% and 14.459% respectively. Less sold on the 2020s (20bn vs 30bn offered) and more on the 2024s and 2034s (25bn each vs 20bn offered).

MARKET MONEY: O/N rates ranged from 40% – 70% because money market ‘surprisingly’ opened NGN63bn long. Today’s maturity is expected to ease the O/N rates as market will be awash with liquidity.

CHINA: China Everbright Ltd., a unit of one of China’s biggest state conglomerates, said it plans to set up a private equity fund of more than HK$5 billion ($645 million) this year to target infrastructure assets in Asia and Europe. “Europe and Asia are where we go for cheap assets,” Chief Executive Officer Chen Shuang said in an interview in Hong Kong this week, citing the Yuan’s strength against many currencies.

The Hong Kong-listed China Everbright aims to boost its assets under management to HK$80 billion this year from close to HK$70 billion now and HK$58 billion in 2014, Chen said.

U.K: Britain is facing a mounting housing crisis amid a shortage of supply that the country’s new government will have to address as a priority, according to the Royal Institution of Chartered Surveyors.

In its monthly housing report, RICS said supplies fell in March, putting further upward pressure on prices. Jeremy Blackburn, head of policy at the institution, said the stock must be boosted “particularly for those on lower incomes.”

COMMODITIES: Oil traded near the highest price this year amid speculation a slowdown in the U.S. shale boom will ease the biggest supply glut since 1930.

Futures were little changed in New York after a 5.8% gain on Wednesday that capped a five-day rally. Crude production declined by 20,000 barrels a day to 9.4 million last week, according to the Energy Information Administration. Oil has surged almost 12% since April 8 on signs that a slump in the number of active U.S. rigs is leading to a production slowdown that may alleviate the global surplus.

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     29.503

Money Market Highlights
O/N                                  71.7917
30 Days                           16.2595
90 Days                           17.2266
180 Days                         18.1629

USD 1 Month                 0.18004
USD 2 Months               0.2263
USD 3 Months               0.2744
USD 6 Months               0.4014
USD 12 Months             0.6926

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           02-Jul-15          12.94
182d         01-Oct-15          14.60
364d        24-Mar-16         15.01
2yr            27-Apr-17          14.08
3yr            29-Jun-19         14.03
5yr            13-Feb-20         14.03

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         198.65       199.35
EURUSD      1.o546       1.0748
GBPUSD       1.4736       1.4938
USDJPY        119.26       119.29
USDCHF       0.96115    0.9713
GBPEUR       1.3383       1.4037
USDZAR      11.9410     12.1444
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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