A Review of the Nigerian Energy Industry

Financial market products & services update

Currency notes, coins & gold bars
Currency notes, coins & gold bars

05 May 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Nigeria is set to be the first African country with an economy larger than $1 trillion, according to the latest projections from the U.S. Department of Agriculture. Africa’s most populous nation, which recently held peaceful elections, revamped its gross domestic product data in 2014 and pulled ahead of South Africa to become the continent’s largest economy with a GDP of $469 billion. Between now and 2030, experts predict annual growth rates as high as 7.92% resulting in a GDP of $1.05 trillion.

FIXED INCOME: Some of last week’s demand on the March 2024s spilled into yesterday’s trading but there seemed to be slightly more supply. We saw decent sellers (locals) of the March 2024s at 13.98% area. Balanced flows seen on the July 2034s (N10.3bn) which was offered above 14%. In general, it was a quiet day for bonds with the June 2019s recording the least activity (only N300mm traded). Tbills was more of the same; we keep seeing the short end of the tbill curve being dragged to lows since nothing will be earned on cash in excess of NGN7.5bn at the CBN. 4% handle was traded on the 14 may bills. Long end of the tbill curve saw less activity but felt weaker. OMO auction out with stop rate unchanged. N135.196bn of 255day paper sold at 14% discount (15.52% yield). O/N rate traded a range of 6-9% with money market opening long approximately NGN600bn.

FX: There was an oil company in the market yesterday, with the Central Bank intervention rate maintained at $/NGN 197.00.

U.S: Severe winter weather played a major role in paltry U.S. economic growth in the first quarter of 2015, but hopes are high for an increase in spring and summer sales in regions that were gripped by a long winter. Weather has a strong impact on consumer behaviour and our ability to provide goods and services, reports said. A well-above average snowfall in New England and cold air helped slow the economy, Jason Furman, chairman of the President’s Council of Economic Advisers, stated. The nation’s Gross Domestic Product (GDP) increased 0.2 percent for the first quarter, the Bureau of Economic Analysis estimated on Wednesday, April 29.

CHINA: China’s economy is expected to slow further to 6.8 percent in the second quarter from a six-year low hit in the first, a top government think tank said in a research report that underscored the need for more stimulus to shore up faltering growth. The forecast by the State Information Centre backed last month’s move by China’s central bank to cut the amount of cash that banks must hold as reserves, the second industry-wide cut in two months, to combat slowing growth. “China’s economic growth will slow in the second quarter (of this year), impacted by structural reform,” the think-tank said in its research report published in the official China Securities Journal on Monday.

COMMODITIES: Brent crude oil steadied above $66 a barrel on Tuesday, just below its 2015 high, after protesters shut down the eastern Libyan oil port of Zueitina, hampering exports. Zueitina was one of the few Libyan ports still exporting oil as many others have closed due to fighting or disruptions at oilfields since the ousting of former dictator Muammar Gaddafi. Libyan oil output is now less than 500,000 barrels per day (bpd), officials say, a third of what Libya pumped before 2010.

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
O/N                                   9.8333
30 Days                           12.9492
90 Days                           13.9918
180 Days                         15.1594

USD 1 Month                 0.1220
USD 2 Months               0.1475
USD 3 Months               0.1823
USD 6 Months               0.2328
USD 12 Months             0.2798

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           06-Aug-15         10.57
182d         15-Oct-15          12.43
364d        21-Apr-15          14.22
2yr            27-Apr-17         14.03
3yr            29-May-19       14.08
5yr            13-Feb-20        14.07

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         196.00      199.50
EURUSD      1.o988       1.1190
GBPUSD       1.5018       1.5220
USDJPY        120.30       120.33
USDCHF       0.93375   0.9439
GBPEUR       1.3532       1.3736
USDZAR      11.9551     12.1585
JPYNGN      165.3997  165.5003
CHFNGN        N/A         N/A
EURNGN        N/A         N/A
GBPNGN         N/A         N/A
ZARNGN         N/A         N/A

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