A Review of the Nigerian Energy Industry

Financial market products & services update

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

19 May 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Nigeria, Africa’s biggest oil producer, plans to issue separate leases for gas assets in order to attract more investors to boost output of the fuel, the state- owned oil company said. “Gas, over the last few years, has become a very prominent commodity on its own, which requires a life of its own,” David Ige, group executive director for gas and power at the Nigeria National Petroleum Corp., said in a May 15 interview in Abuja, the capital. The nation needs companies such as Russian exporter OAO Gazprom and Centrica Plc, the U.K.’s biggest energy supplier, to enter the market to “drive our gas agenda aggressively,” he said. Almost all of the West African nation’s reserves of 184 trillion cubic feet of gas, the world’s eight-largest, were found in the course of searching for crude.

FIXED INCOME: The week starting on a weak trend for both Tbills and bonds. Market players were pretty much selling off positions and this caused the yields to push up from last week’s closing. Bonds went up about 8bps while Tbills inched up by 8bps and 27bps respectively. The market trend was caused by the tightness in liquidity, profit taking by market players and uncertainty around the outcome of MPC today. General consensus however is that the CBN will maintain its current stance. O/N on Monday ranged between 15% – 25% as money market liquidity is just about NGN130bn.

FX: No change in the special auction modalities. CB sold an estimated $25m-$35m yesterday, maintaining the intervention rate at $/NGN 197.00. The interbank market remained highly illiquid.

COMMODITIES: Oil slid for a fifth day amid speculation that a recovery in prices is premature and will help sustain a supply glut. Brent for July settlement slid 26 cents to $66.01 a barrel on the London-based ICE Futures Europe exchange. It decreased 0.8 percent to $66.27 on Monday.

EUROPE: Greek leaders expressed optimism a deal to unlock bailout funds is within reach, in the face of continuing warnings by creditors that the country has yet to comply with the terms of its emergency loans. The four-month standoff between Europe’s most indebted state and its lenders has triggered an unprecedented liquidity squeeze which pulled the Mediterranean nation’s economy into a double-dip recession. Record deposit withdrawals, and the state’s increasing difficulty in meeting debt payments have sparked renewed doubts about the country’s place in the euro area. Greece’s anti-austerity government has repeatedly expressed confidence a deal was imminent, only to be rebuffed by creditors seeking more concrete actions in areas including labor market deregulation and pension-system overhaul.

CHINA: China is considering relaxing rules for bond sales in a bid to boost slowing economic growth, people familiar with the matter said Tuesday. The nation’s economic planning agency is seeking opinions on a draft proposal on the changes meant to help investment funding, the people said, asking not to be identified because the matter hasn’t been made public. The National Development and Reform Commission proposals include lowering the required debt- to-asset ratio and canceling limits on the number of note sales if proceeds are for projects approved by the government. China’s economy showed little evidence of an acceleration at the start of the second quarter, suggesting policy makers’ steps to free up more funds for lending haven’t been enough.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   8.70%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     29.808

Money Market Highlights
O/N                                  23.7500
30 Days                           14.9112
90 Days                           15.9494
180 Days                         16.8274

USD 1 Month                 0.1840
USD 2 Months               0.2257
USD 3 Months               0.2760
USD 6 Months               0.4142
USD 12 Months             0.7251

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           06-Aug-15         11.53
182d         15-Oct-15          13.79
364d        05-May-16        15.09
2yr            27-Apr-17         13.79
3yr            29-May-19       13.71
5yr            13-Feb-20        13.64

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         196.00     199.50
EURUSD      1.1085       1.1287
GBPUSD       1.5465      1.5667
USDJPY        119.98      120.01
USDCHF       0.92705   0.9372
GBPEUR       1.3814      1.4018
USDZAR      11.7602     11.9636
JPYNGN      165.8197  165.9203
CHFNGN       215.03      216.72
EURNGN        N/A         N/A
GBPNGN         N/A         N/A
ZARNGN         N/A         N/A

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