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.

30 April 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, on Wednesday said the federal government would disburse N156 billion to oil marketers today in order to arrest the fuel shortage nationwide.

Speaking to journalists in Abuja shortly after the opening of the 20th conference of Directors General of Customs and Excise of the World Customs Organisation, West and Central Africa Region, she explained that the amount due to oil marketers included N100 billion in IOUs, an informal document acknowledging government’s debt to them, which was now due, as well as interest rate differentials amounting to N56 billion.

FX: Latest published figures show current 30 days moving average gross FX reserves as at 28th April at $29.512bn. There has been slight uptick in reserves lately since hitting a $29.48bn low by 16th April, 2015. Yesterday’s special auction closed at $/NGN 197.00.

FIXED INCOME: Bond markets yesterday opened softer but picked up almost immediately. It was a quiet morning until some buy-side client’s offloaded risk and we saw the curve widen till close. Stop rate at OMO unchanged at 14% discount causing more sell pressure on the long end of the bill curve while the short end remains well bid.

MARKET MONEY:
O/N rates closed at 9% yesterday. Roughly about NGN566bn has been mopped up via OMO since the CBN resumed its auctions. OMO auction continues to see healthy subscriptions with money market long NGN828bn. Another OMO auction to be done today

EUROPE:
The euro traded near its highest in more than a month, while European shares retreated with Asian stocks and bonds after the Federal Reserve downplayed weak U.S. growth and kept open the prospect of interest-rate increases. Commodities headed for the best April since 2006.

The joint currency bought $1.1123 by 8:17 a.m. in London, heading for its biggest monthly advance since 2011.

U.S: Federal Reserve policy makers left open the possibility of raising interest rates in the second half of this year by playing down the significance of the economy’s slowdown to a near-standstill in the first quarter. In a statement issued Wednesday after a two-day meeting, Chair Janet Yellen and her colleagues blamed the winter slump partly on “transitory factors” and reiterated their belief that growth will pick up to a “moderate pace.”

U.S. stocks, Treasury securities and the dollar slipped as the Fed did little to alter views on the timing for higher rates. The yield on 10-year Treasury notes rose four basis points to 2.04%, while rates surged on debt from Germany to the Netherlands and Spain.

COMMODITIES: Iron ore prices that sank to a decade-low at the start of this month are poised to end April with the biggest gain in almost two years. A slump on Wednesday signalled the rally may prove to be fleeting.

Ore with 62% content at Qingdao tumbled 4.6% to $57.13 a dry metric ton yesterday, according to Metal Bulletin Ltd. Prices are still 11% higher this month, heading for the biggest increase since July 2013, after surging as much as 27% from the low of $47.08 on April 2. They remain 70% below the record set in 2011.

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     29.512

Money Market Highlights
NIBOR (%)
O/N                                   9.1267
30 Days                           12.4771
90 Days                           13.6331
180 Days                         14.7405

LIBOR (%)
USD 1 Month                 0.1802
USD 2 Months               0.2327
USD 3 Months               0.2781
USD 6 Months               0.4076
USD 12 Months             0.6990

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           30-Jul-15          11.04
182d         15-Oct-15          13.00
364d        07-Apr-16         14.75
2yr            27-Apr-17         13.96
3yr            30-May-18       14.01
5yr            13-Feb-20        14.05

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         196.00      199.50
EURUSD      1.1054       1.1256
GBPUSD       1.5338      1.5540
USDJPY        119.03       119.06
USDCHF       0.93285   0.9430
GBPEUR       1.3739       1.3943
USDZAR      11.7064     11.9098
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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