A Review of the Nigerian Energy Industry

Financial market products & services update

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

26 May 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: The Federal Government on Monday signed an agreement with oil marketers to end the lingering fuel scarcity in the country. To this end, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) and Petroleum and Natural Gas Senior Staff Association (PENGASSAN) have suspended their industrial actions. Lifting of petrol products is expected to begin in the next six hours. This was revealed by Magnus Abe, the chairman, Senate Committee on Petroleum Resources (downstream). Abe said that the resolution was reached after a meeting between the Senate Committee on Petroleum Resources (upstream and downstream); Major Oil Marketers Association of Nigeria (MOMAN); minister of finance and coordinating minister for the economy, Ngozi Okonjo-Iweala; group managing director, Nigerian National Petroleum Corporation (NNPC), Joseph Dawha and major stakeholders in the oil and gas sector.

FX: Intervention rate was maintained at $/NGN 197.00.

FIXED INCOME: We closed with slight buying on the 10 and 20 year paper (March 24s and July 34s) even though there had been better sellers all day in bonds. Bond curve widened about 7bps average following the fuel scarcity headline with the yield on the June 19s moving the most (+19bps). Tbills saw the short end bid while the long end was better offered. Money market long NGN250bn approximately with O/N rates closing at 9%.

USA: U.S. Federal Reserve Vice Chairman Stanley Fischer said it was “misleading” to give so much importance to the Fed’s first interest rate hike since the process of returning to a more normal level will take a few years. Fischer, speaking in Israel, said that while markets largely expect the first rate hike in September, it will be determined by data and not by date. “If the (U.S.) economy is growing very, very slowly we will wait. If the economy is growing faster we will do it quicker,” he said in a speech.

COMMODITIES: WTI oil futures traded modestly flat ahead of Europe open, extending upbeat momentum from the previous session, with traders seeking fresh market drivers as Europe and US re-opens after the holiday. Currently, WTI trades 0.29% higher at 59.89, having faced rejection at 60 barrier. Oil prices holds moderate gains this session, although the upside remains capped by rising US dollar across the board.

CHINA: China’s state planning agency on Monday released a list of more than 1,000 proposed projects totalling 1.97 trillion Yuan ($317.75 billion) that it is inviting private investors to help fund, build and operate. The National Development and Reform Commission said the 1,043 projects, in sectors such as transport, water conservancy and public services, will be done as public-private partnerships (PPP). An NDRC statement did not say whether private investors will include foreign firms. As its economic growth slows, China is increasingly turning to PPP, a model not commonly used, to fill a widening funding gap as Beijing clamps down on traditional off-balance sheet borrowing methods used by local authorities.

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     29.758

Money Market Highlights
O/N                                  10.2750
30 Days                           14.8337
90 Days                           16.2208
180 Days                         17.3392

USD 1 Month                 0.1849
USD 2 Months               0.2320
USD 3 Months               0.2845
USD 6 Months               0.4187
USD 12 Months             0.7376

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           27-Aug-15         11.74
182d         03-Dec-15         13.71
364d        05-May-16        15.21
2yr            27-Apr-17         13.81
3yr            29-Jun-19        13.92
5yr            13-Feb-20        13.86

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         196.00      199.50
EURUSD      1.0795       1.1997
GBPUSD       1.5304       1.5506
USDJPY        122.61       122.64
USDCHF       0.94525   0.9554
GBPEUR       1.4037      1.4241
USDZAR      11.9014     12.1048
JPYNGN      162.2697  162.3703
CHFNGN       212.59      214.28
EURNGN       221.59      222.95
GBPNGN        309.16     310.55
ZARNGN          15.90        17.83

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