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.

22 April 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Nigerian economy added a total of 369,485 new jobs in the fourth quarter of 2014 (Q4, 2014), according to the National Bureau of Statistics.

According to the latest job creation statistics released on Tuesday, the fourth quarter results showed an improvement over the 349,343 jobs added in the previous quarter. Of the total employment generated in the period under review, the informal sector of the economy recorded the highest number of intakes with 227,072 jobs or 61.5% of the total figure, while the formal sector recorded 138,026 jobs or 37.7% as well as the public sector which accounted for 4,387 jobs or 1.2% of total jobs created.

FX: CBN’s special auction rate was maintained at $/NGN 197.00. BDC/parallel market rate has been tickling higher lately as initial election euphoria dissipates. Latest published figures [April 20, 2015] has gross FX reserves at $29.50bn [30 days moving average] from $29.481bn as at April 16, 2015.

FIXED INCOME: Nigeria bonds continue intraday topsy turvy moves as street unsure how all the liquidity coming in will be managed by CBN come Thursday. Some demand on the July 2034s but there seemed to be some happy profit takers taking yields to 14% area after 13.80% had been traded earlier in the session. T-bill market remains well bid ahead of all the incoming cash.

MARKET MONEY: Liquidity in the money market currently a bit tight with O/N rates trading in the 16% – 20% range. All eyes on Thursday when the system becomes awash with liquidity.

CHINA: China plans to allow global asset managers participating in a foreign-currency investment program to move capital out of the country daily rather than once a week, according to a Reuters report.

The change to the Qualified Foreign Institutional Investor program is among several proposals being reviewed by China’s State Council, or the cabinet, and could be pushed through in weeks, Reuters reported Wednesday, citing people it didn’t name. QFII permits foreign currency to be used for investments in China’s onshore stocks and bonds.

U.K: A Conservative win in the U.K.’s May 7 election would be seen as the most market-friendly outcome, Goldman Sachs Group Inc. analysts said in a note to investors.

A Conservative-led administration, whether alone or in coalition with their current partners, the Liberal Democrats, is likely to deliver more rigor in bringing down the budget deficit, while Ed Miliband’s Labour Party has promised tax rises and regulatory measures that may weigh on banks, utilities and retailers, according to the note.

COMMODITIES: Oil fell for a second day before U.S. government data that’s forecast to show crude stockpiles expanded further from a record.

Futures slid as much as 1.6% in New York, extending Tuesday’s 2.2% decline. Crude inventories probably increased by 3.2 million barrels last week, a Bloomberg survey of analysts showed before an Energy Information Administration report on Wednesday. Venezuelan officials met with Saudi Arabia’s Deputy Oil Minister Abdulaziz Bin Salman to discuss stabilizing the market.

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     29.500

Money Market Highlights
O/N                                  20.2917
30 Days                           15.5697
90 Days                           16.7105
180 Days                         17.7728

USD 1 Month                 0.1815
USD 2 Months               0.2294
USD 3 Months               0.2772
USD 6 Months               0.4056
USD 12 Months             0.7009

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           23-Jul-15          10.33
182d         15-Oct-15          12.93
364d        07-Apr-16         14.34
2yr            27-Apr-17         13.69
3yr            30-May-18       13.82
5yr            13-Feb-20        13.94

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         196.00      199.50
EURUSD      1.o652       1.0854
GBPUSD       1.4845       1.5047
USDJPY        119.53       119.56
USDCHF       0.94835   0.9585
GBPEUR       1.3798       1.4002
USDZAR      12.0329     12.2363
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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