A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets chart
Financial markets chart

06 May 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: A total of N1.45tn was shared by the three tiers of government from the Federation Account in the first three months of the year, figures obtained from the Federation Accounts Allocation Committee showed. While the sum of N1.45tn was allocated, the FAAC monthly report showed that the country generated a total of N1.13tn within the first three months of this year. Of the amount shared in January, the Federal Government received N194.3bn, representing 52.68 per cent; states, N98.5bn, representing 26.72 per cent; while the local governments got N75.9bn. The sum of N39.4bn was allocated to the nine oil producing states based on the 13 per cent derivation principle. In terms of revenue collected, the committee said the federation had been witnessing a decline in revenue; the sum of N416.04bn was earned in January, N401.46bn in February and N315.04bn was generated in March. The report blamed the continued shutdown of trunks and pipelines at various terminals for the negative impact on the country’s revenue.

FX: The special auction intervention rate was yesterday maintained at 197.00 and CB sold an estimated $20-$30m; there was slight oil flow auction too. Intraday levels remained in the 197-199.50 range with BDC rate also reported to be stable at 218/221.50.

FIXED INCOME: Yesterday’s bond auction circular served as a reminder of the small offer size at next week Wednesday’s bond auction. N60bn offered versus last month’s N70bn. This spurred some buying across the curve with most of the demand on the March 2024s (these seemed to also have some offshore interest behind it). Money market continues to be liquid but there was no OMO auction for reasons unknown. Absence of OMO caused the neglected long end of the tbill curve erase some of the earlier losses. O/N rates closed at 9%.

U.S: The US economy may have slipped into reverse at the start of the year, as a widening trade deficit has taken its toll. While official estimates of first quarter growth showed a very small increase, new data on the trade balance suggest that the world’s largest economy may be in worse shape than previously believed. The US trade deficit widened by $15.5bn (£10.2bn) in March, to a gap of $51.4bn, following a port strike which ended in late February and a surge in imports. Analysts had expected the deficit to grow to just $41.2bn.

EUROPE: Euro zone economic growth will be slightly stronger this year than previously forecast, according to the European Commission’s latest forecast. It predicts 1.5% growth this year, up 0.2 percentage points from its forecast in February, thanks to cheaper oil, a weak euro and stimulus measures. The improvement was despite a much gloomier outlook for Greece, which saw forecast growth cut to 0.5% from 2.5%. The report said faster growth would see inflation rise and unemployment fall. For 2016, the Commission kept its forecast of 1.9% for the euro zone.

COMMODITIES: Crude oil futures pushed higher again on Wednesday, putting an upward that began a month-and-a-half ago back on track. On the New York Mercantile Exchange, light, sweet crude futures for delivery in June LM5, +1.64% was trading above $61 a barrel, a level seen only five months ago. The contract closed above $60 a barrel on Tuesday for the first time in that many months. It was trading at $61.36 a barrel recently, up $1.59, or 1%. Brent crude for June delivery LCOM5, +1.21% on London’s ICE Futures exchange rose 33 cents to $67.85 a barrel.

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     29.612

Money Market Highlights
O/N                                   9.1000
30 Days                           12.3428
90 Days                           13.3458
180 Days                         14.7194

USD 1 Month                 0.1805
USD 2 Months               0.2296
USD 3 Months               0.2759
USD 6 Months               0.4128
USD 12 Months             0.7214

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           06-Aug-15         10.30
182d         15-Oct-15          12.01
364d        21-Apr-15          14.89
2yr            27-Apr-17         13.93
3yr            29-May-19       13.83
5yr            13-Feb-20        13.87

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         198.87      199.45
EURUSD      1.1140        1.1342
GBPUSD       1.5056      1.5258
USDJPY        119.75       119.78
USDCHF       0.91885   0.9290
GBPEUR       1.3382      1.3586
USDZAR      11.9009     12.1043
JPYNGN      166.1997  166.3003
CHFNGN       214.59      216.28
EURNGN        N/A         N/A
GBPNGN         N/A         N/A
ZARNGN         N/A         N/A

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