A Review of the Nigerian Energy Industry

Financial market products & services update

Financial market
Financial market

13 May 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Nigeria’s government owes the nation’s oil marketers, importers and storage companies more than N200 bn ($1 bn) in subsidy payments, according to an industry body. The members of the Major Oil Marketers Association of Nigeria, which include Total SA, Oando Plc, Forte Oil Plc and Exxon Mobil Corp.’s local unit, are owed about 40 percent of that amount as of the end of March, with more costs incurred since then, Thomas Olawore, the body’s executive secretary, said on Tuesday. A “recent meeting” with Finance Minister Ngozi Okonjo-Iweala “was not conclusive,” Olawore said in an interview in the commercial capital, Lagos. “Something must be done” about the outstanding amount following the government’s payment of 154 billion naira last month, he said. Nigerians have faced long queues for fuel in recent weeks across Africa’s biggest crude producer and economy, which relies on imports to meet more than 70 percent of domestic needs. The government guarantees cheaper fuel by subsidizing gasoline, paying marketers the difference between the landing price of oil and the fixed domestic price. Nigeria’s President-elect, Muhammadu Buhari, will take over from President Goodluck Jonathan on May 29, causing anxiety among creditors in the downstream industry that the new government may take longer to remedy the funding shortage, Olawore said.

FX: CB sold an estimated $30m-$40m at yesterday’s special auction. Intervention rate was maintained at $/NGN 197.00. BDC/parallel market remains unchanged in the $/NGN 219.00 – $/NGN 221.50 range. Interbank market remains highly illiquid and very bid. Current outstanding/unmet demand is estimated to be north of $1bn

FIXED INCOME: With previous bond auction size smaller and locals still buying, today’s bond auction will come in lower. March 2024s continues to hold up pretty well. Decent demand seen on the long end of the bond curve. Rest of the bond curve felt a bit quiet even though trades were going through. N134bn approx. was sold at yesterday’s OMO (170day paper). Stop rate was unchanged at 14.86% yield. Some demand on tbills towards close of trading yesterday but overall tbill yields inched higher by about 3bps. O/N rates closed at 11%.

COMMODITIES: Brent for June settlement, which expires Thursday, increased as much as 76 cents, or 1.1 percent, to $67.62 a barrel on the London-based ICE Futures exchange. The European benchmark crude traded at a premium of $6.07 to WTI. The more active July contract climbed 53 cents to $67.91.Crude inventories in the U.S, decreased to 487 million barrels through May 1, according to the EIA. Supplies remain near the highest level since 1930, based on monthly records from the Energy Dept’s statistical arm dating back to 1920.

EUROPE: The European Central Bank continued its lifeline to Greece as euro-area nations warned the country still faces a battle to release financial aid.The ECB’s Governing Council opted against tightening terms of Emergency Liquidity Assistance and raised the cap on funding by 1.1 billion euros ($1.2 billion) to 80 billion euros in a telephone conference on Tuesday, according to people familiar with the matter. The decision followed a statement by euro-area finance ministers on Monday recognizing Greece’s new willingness to meet the requirements for more bailout cash.

CHINA: China is starting to convince international money managers that its $7.8 trillion stock market is ready for MSCI Inc.’s global indexes. Templeton Emerging Markets Group’s Mark Mobius, who was against inclusion as recently as March, became the latest convert on Tuesday, saying his funds are now buying yuan-denominated shares.

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     29.670

Money Market Highlights
O/N                                  10.9583
30 Days                           13.9014
90 Days                           15.2007
180 Days                         16.2730

USD 1 Month                 0.1856
USD 2 Months               0.2252
USD 3 Months               0.2750
USD 6 Months               0.4145
USD 12 Months             0.7326

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           06-Aug-15         10.29
182d         15-Oct-15          12.19
364d        21-Apr-15          15.19
2yr            27-Apr-17         13.75
3yr            29-May-19       13.70
5yr            13-Feb-20        13.72

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         198.00      198.95
EURUSD      1.1131        1.1333
GBPUSD       1.5635      1.5837
USDJPY        119.74      119.77
USDCHF       0.92175   0.9319
GBPEUR       1.3908      1.4112
USDZAR      11.8559     12.0593
JPYNGN      166.1697  166.2703
CHFNGN       215.03      216.72
EURNGN        N/A         N/A
GBPNGN         N/A         N/A
ZARNGN         N/A         N/A

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