A Review of the Nigerian Energy Industry

Financial market products & services update

Currency notes, compass & investment chart.
Currency notes, compass & investment chart.

10 June 2015, Sweetcrude, Houston – Local and international financial market products and services update.

FX: No significant change in the market as the two way quote FX market remains shut. Special auction funds filled still at 195.90/196.90. Interbank markets still bid with very little done in bi-lateral trading. About $40m is estimated to have been filled via the CB special auction yesterday.

FIXED INCOME: We expect the quiet bond market to come alive today on the back of the bond auction circular released today. Borrowing increases by N10.22bn (vs. N30bn expected according to the quarter calendar released much earlier). The Tbill market saw a lot of buying interest yesterday because there was no Open Market Operation (OMO). Money market liquidity went sub NGN200bn yesterday causing O/N rates to spike to 14% (+300bps).

FIXED INCOME: We expect the quiet bond market to come alive today on the back of the bond auction circular released today. Borrowing increases by N10.22bn (vs. N30bn expected according to the quarter calendar released much earlier). The Tbill market saw a lot of buying interest yesterday because there was no Open Market Operation (OMO). Money market liquidity went sub NGN200bn yesterday causing O/N rates to spike to 14% (+300bps).

COMMODITIES: Oil extended its biggest advance this month on the signs the slowdown in U.S. drilling is reducing a crude supply glut in the world’s biggest consumer. While oil has rebounded from a six-year low in March to about $60/bbl, the recovery has prompted speculation that U.S. drilling will accelerate from the slowest pace since August 2010. WTI climbed to $61.75/bbl while brent went as high as $66.36/bbl

NIGERIA: The Group of 7 (G7) industrialized nations have resolved to support President Muhammadu Buhari. The group said it acknowledged the manner of Buhari’s emergence as president, as well as the monumental challenges confronting his government, especially in its efforts at combating the Islamist terrorists group, Boko Haram. In a statement issued by his Senior Special Assistant (Media and Publicity), Garba Shehu, his aide said: “At the end of the presentation Buhari made on Monday at the G7 summit, the G7 leaders informed him that they recognized the president’s massive amount of confidence and expectations behind his government. They (G7) acknowledged him as having emerged from an election adjudged to be the freest in the country’s electoral history, but regretted the severe handicaps his new government has to face from the outset..

US: Banks The Justice Department has begun an examination of trading in the U.S. Treasury market, following the outlines of its successful cases against Wall Street’s illegal practices in foreign currencies and other businesses, said three people familiar with the inquiry. The government is also continuing to look into possible collusion in gold and silver markets and in trading around certain oil benchmarks, the people said. Though the latest inquiry into Treasury trading is in its earliest stages, investigators are said to be probing whether information is being shared improperly by financial institutions.

CHINA: China’s efforts to obtain reserve status for the yuan received an early warning, with a compiler of equity indexes saying the nation needs more policy changes before its shares can be added to an emerging-market benchmark.

New York-based MSCI Inc. deferred a decision on including yuan-denominated stocks, citing investor concerns such as accessibility and capital mobility. Chinese officials have called for the International Monetary Fund to include the yuan in its basket of reserve currencies in a review in October.

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     29.216

Money Market Highlights
NIBOR (%)
O/N                                  11.0833
30 Days                           15.7738
90 Days                           17.0239
180 Days                         17.9681

LIBOR (%)
USD 1 Month                 0.1440
USD 2 Months               0.2365
USD 3 Months               0.2879
USD 6 Months               0.4416
USD 12 Months             0.7820

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           03-Sep-15         11.68
182d         03-Dec-15        12.38
364d        02-Jun-16         14.61
2yr            27-Apr-17         13.85
3yr            29-Jun-19        13.94
5yr            13-Feb-20        13.93

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         195.90      199.40
EURUSD       1.1181        1.1383
GBPUSD       1.5374       1.5576
USDJPY        123.10       123.13
USDCHF       0.92465    0.9348
GBPEUR       1.3614       1.3818
USDZAR      12.2581      12.4615
JPYNGN      161.4997    161.6003
CHFNGN       213.08      214.77
EURNGN       223.71      225.07
GBPNGN        307.03     308.43
ZARNGN          15.13       17.05

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