A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

29 April 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Following fears about the possible outcome of the just concluded general elections and reversed economic growth due to dwindling oil prices, aggregate capital inflow into Nigeria fell considerably by $1.82 billion in 2014.

The Central Bank of Nigeria (CBN) External Sector Development Report for Q4 2014 showed that aggregate capital inflows (gross) stood at $2.64 billion, a sharp decline from $6.79 billion in the previous quarter and $4.46 billion in the corresponding period in 2013.

The External Sector Development Report also revealed that direct investment amounted to $1.03 billion while there were outflows of $770 million from portfolio investment. Other investment inflows; i.e. loans totalled $840 million.

FX: CBN’s special auction rate intervention was maintained at $/NGN 197.00. Interbank activity remains very minimal however as oil auction winnings are typically utilized internally by winning banks in light of the dire liquidity situation.

FIXED INCOME: No OMO auction yesterday even though money market was long NGN 900 billion approximately. This might have been because of the CBN system issues which lasted again for a few hours yesterday. Trading in the bills market was mixed as yield direction varied across maturities.

OMO auction will be held today with NGN 100 billion on offer for 274days.

MARKET MONEY: O/N rates closed at 8% yesterday. OMO auction will be done today. Shortened week as Friday the 1st of May is a Public Holiday.

CHINA: China will cut special government subsidies for shale gas developers in the next five years even as the country encourages explorers to produce more clean energy such as natural gas to replace coal.

The subsidies will be cut to 0.3 Yuan per square meters from 2016 to 2018, and to 0.2 Yuan from 2019 to 2020, China’s finance ministry said in a statement today, citing industrial development polices technology advancement and cost changes as reasons, without elaborating.

U.S: Treasury 10-year notes gained, pushing yields down from a one-month high, before a report that analysts said will show growth in the world’s biggest economy slowed for a second quarter.

Shorter-dated securities were little changed before a government sale of seven-year notes, in the last of four auctions of coupon-bearing debt this week that are scheduled to total $105 billion. The notes are finding support before Federal Reserve officials issue a statement on the potential timing of the first interest-rate increase since 2006, with economists having pushed back forecasts amid an uneven recovery.

COMMODITIES: Oil fell for the third time in four days before U.S. government data forecast to show crude stockpiles expanded further from a record. Futures dropped as much as 0.5% in New York. Crude inventories probably increased by 3.3 million barrels last week, according to a Bloomberg survey of analysts before an Energy Information Administration report on Wednesday. OPEC technical officials will meet with other producers next month in Vienna to discuss the global market ahead of a June 5 ministerial gathering.

Oil’s rally from a six-year low in March has been stymied by signs a global supply glut that drove prices into a bear market last year will persist.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   8.50%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     29.519

Money Market Highlights
O/N                                   8.9183
30 Days                           12.5638
90 Days                           13.6361
180 Days                         14.9202

USD 1 Month                 0.1812
USD 2 Months               0.2317
USD 3 Months               0.2790
USD 6 Months               0.4076
USD 12 Months             0.7011

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           30-Jul-15          11.67
182d         15-Oct-15          12.93
364d        07-Apr-16         14.28
2yr            27-Apr-17         13.78
3yr            30-May-18       13.91
5yr            13-Feb-20        14.03

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         196.00      199.50
EURUSD      1.o896       1.1098
GBPUSD       1.5283       1.5485
USDJPY        119.02       119.05
USDCHF       0.94965   0.9598
GBPEUR       1.3887       1.4091
USDZAR      11.7479     11.9513
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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