A Review of the Nigerian Energy Industry

Financial market products & services update

Coins on a financial chart.
Coins on a financial chart.

20 May 2015, Sweetcrude, Houston – Local and international financial market products and services update.
FX: No change in the special auction modalities. CB sold an estimated $100m-$120m yesterday, maintaining the intervention rate at $/NGN 197.00. The interbank market remained highly illiquid.

FIXED INCOME: The selloff continued in the market today, bonds and bills were well offered. The very short end of the t-bill curve was more affected as money market tightness continued to push O/N rate up (above 50%). Yields on the short dated papers pushed up by 50bps, to close around 13% discount. Bond traded marginally at the end of the day as some demand came in towards the close of trading. The MPC main decision from the meeting was to increase the private sector CRR from 20% to 31% and drop the public sector CRR from 75% to 31%, thereby harmonizing the rates.

COMMODITIES: Oil snapped a five-day retreat on signs the oversupply in the U.S. crude stockpiles is moderating. Brent rose 73 cents to $64.75/bbl. Crude inventories in U.S., the world’s biggest oil user, slid to 484.8mill barrels.

NIGERIA: Nigeria’s central bank kept its benchmark interest rate unchanged at a record high before the incoming government takes office. The Monetary Policy Committee left the rate at 13%. Inflation accelerated to 8.7% in April, close to the top of the CB’s 6%-9% target. The committee stressed the need for proactive measures to protect the reserves buffer, to safeguard the value of the domestic currency, and engender the overall stability of the banking system.

US: The dollar traded at a two-week high versus the euro and extended gains against the yen, while Treasuries advanced before the Federal Reserve releases minutes of its last meeting. Oil rallied for the first time in six days. The dollar extended rebound from a four-month low as the highest new-housing starts since 2007 reignited speculation about when the Fed will raise rates, underscoring the divergence of U.S. monetary policy from Europe and Asia Pacific. European Central Bank policy makers will discuss Greek bank aid on Wednesday.

CHINA: China vowed on Wednesday to invest hundreds of billions of yuan in the coming years to boost Internet speed and expand broadband access in rural regions. The country plans to spend more than 430 billion yuan ($70.4 billion) in 2015 and more than 700 billion yuan total in 2016 and 2017 to promote network construction, according to a guideline issued by the State Council, China’s cabinet. According to the guideline, China will accelerate building of the country’s high-speed broadband networks and improve access in more than 14,000 villages by the end of 2015. By the end of 2017, the average cable broadband speed for users in major cities will be increased to 30 megabytes per second (Mbps), more than triple the current speed, while that in smaller cities will be upgraded to 20 Mbps.

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     29.763

Money Market Highlights
O/N                                  53.6667
30 Days                           14.7283
90 Days                           15.6718
180 Days                         17.0153

USD 1 Month                 0.1868
USD 2 Months               0.2324
USD 3 Months               0.2810
USD 6 Months               0.4155
USD 12 Months             0.7276

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           06-Aug-15         11.57
182d         15-Oct-15          14.04
364d        05-May-16        15.21
2yr            27-Apr-17         13.78
3yr            29-Jun-19        13.70
5yr            13-Feb-20        13.61

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         196.00     199.50
EURUSD      1.0986       1.1188
GBPUSD       1.5392      1.5595
USDJPY        121.00      120.03
USDCHF       0.9347     0.9448
GBPEUR       1.3872      1.4077
USDZAR      11.8522     12.0564
JPYNGN      164.4000  164.5200
CHFNGN       215.03      216.72
EURNGN        N/A         N/A
GBPNGN         N/A         N/A
ZARNGN         N/A         N/A

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