A Review of the Nigerian Energy Industry

Financial market products & services update

Coins on and investment chart.
Coins on and investment chart.

22 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 $80m yesterday, maintaining the intervention rate at $/NGN 197.00. The interbank market remained highly illiquid.

FIXED INCOME: Bonds and T-bills market opened yesterday in a selling mode as counterparties anticipated the effect of the CRR decision which filtered through at midday local time. The harmonization decision sent a debit of NGN144bn into the system, which was neutralized by the OMO bill maturity (21th May 2015) of NGN191bn. Money Market liquidity closed around NGN285bn with overnight rates at 10%. Following this, selling pressure eased and some demand came back at market close in both bills and bonds. Day on day t-bills yields pushed up about 15bps with a marginal rise of 5bp on bonds

COMMODITIES: Oil headed for a 10th weekly gain, the longest rising streak since trading started in 1983, amid signs that the U.S. crude stockpile glut is easing. OPEC will continue to favor market share over prices when it meets next month because rival producers are already starting to buckle. Brent settled at $66.38/bbl

NIGERIA: Stakeholders in the Nigerian oil and gas industry have said the grant of operatorship of divested oil blocks to indigenous companies will boost local participation in the sector, stem corruption and increase the nation’s oil revenue. They therefore described as “very insensitive”, the industrial action embarked upon by workers in the employ of the Nigerian Petroleum Development Company (NPDC) and its parent company, the Nigerian National Petroleum Corporation (NNPC) over the transfer of operatorship of one of the divested blocks, Oil Mining Lease (OML) 42, to Neconde Energy Ltd. Some of the oil industry experts, who spoke on the development expressed surprise that this action is coming at a period when Nigeria is in a dire economic quagmire.

US: Janet Yellen is haunted by the taper tantrum as the Federal Reserve lays the groundwork for its first interest-rate increase in almost a decade. Chair Yellen and her colleagues are fretting that bond yields near record lows could surge once the Fed starts raising rates, according to minutes of their April meeting released this week. Higher costs of everything from mortgages to car loans could result, potentially putting the fragile economic recovery at risk.

INDIA: When In the wheat fields stretching across northern India, farmers like Dalvir Sharma are starting to turn on Prime Minister Narendra Modi. Sharma, 51, voted for Modi’s Bharatiya Janata Party last year after it promised to stem rising prices in the market. Now he’s struggling to pay back a 100,000 rupee ($1,570) loan after unseasonal rains destroyed most of his crop and guaranteed prices increased at the slowest pace in at least four years. How Modi handles rising discontent among his rural support base will determine his ability to win upcoming elections in largely agrarian states like Bihar where farmers hold the biggest sway, according to Himanshu, who goes by one name and teaches economics at Jawaharlal Nehru University in New Delhi.

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     29.798

Money Market Highlights
O/N                                  11.7500
30 Days                           14.3339
90 Days                           15.5351
180 Days                         16.8560

USD 1 Month                 0.1848
USD 2 Months               0.2310
USD 3 Months               0.2820
USD 6 Months               0.4182
USD 12 Months             0.7391

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           13-Aug-15         12.78
182d         29-Oct-15         14.89
364d        05-May-16        15.03
2yr            27-Apr-17         13.81
3yr            29-Jun-19        13.75
5yr            13-Feb-20        13.67

Indicative Currency Exchange Rates
                          Bid       Offer
USDNG         196.00     199.50
EURUSD      1.1066       1.1268
GBPUSD       1.5549      1.5751
USDJPY        120.77      120.80
USDCHF       0.92745    0.9397
GBPEUR       1.3912      1.4116
USDZAR      11.7015     11.9049
JPYNGN      164.7497  164.8503
CHFNGN       212.59      214.28
EURNGN       221.59      222.95
GBPNGN        309.16     310.55
ZARNGN          15.90        17.83

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