A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

15 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. CB’s total last week’s sale estimated at about $163mio as against about $225mio the previous week.

FIXED INCOME: Inflation prints had no effect on the market as system liquidity remains the main driver of yields on bills, while bonds are still seen weaker heading into the auction this week. CRR cycle resulted in a net credit of N60bn into the system (money market now long N183bn). This kept O/N rates at 11%.The selling pressure on the bill curve also reduced and we saw demand trickle in at 13% and above on the short end.

COMMODITIES: Oil held losses near $60 a barrel as rising Libyan production fuelled speculation OPEC members will prolong a supply glut. Libya’s output has climbed to 500,000 barrels a day, Libya News Agency reported, citing an unidentified official at National Oil Corp. Drillers in the U.S., the world’s biggest crude consumer, reduced the number of active rigs for a 27th week, data from Baker Hughes Inc. showed. Brent settled 7cents lower at $63.80/bbl.

NIGERIA: The Federal Government’s daily spending on petrol subsidy may have risen to N2.06bn as the pricing template for the product by the Petroleum Products Pricing Regulatory Agency on Sunday put the subsidy at N51.61 per litre, the highest level this year. The landing cost of Premium Motor Spirit, otherwise known as petrol, was put at N123.12 per litre as of Thursday, June 11, up from N119.66 per litre on June 2, while the Expected Open Market Price was N138.61 per litre. Based on daily petrol consumption of 40 million litres, a figure supplied by the Pipelines and Products Marketing Company, the total subsidy cost on the product as of June 11 would amount to N2.06bn at N51.61 per litre, up from N48.15 on June 2.

US: Bank Dollar bulls and bears are united on one thing: next week’s Federal Reserve meeting will dictate the path of the U.S. currency. Price swings by the greenback versus the euro reached the highest level since January, raising the stakes for central bank policy makers who have acknowledged a strong dollar poses an economic headwind. Traders are preparing to parse every post-meeting syllable from Fed Chair Janet Yellen for guidance on the timing of its first rate interest-rate increase since 2006 and the path beyond.

CHINA: China could China’s auto sales hit a new low over a three-month period in May and experts do not expect rapid recovery in the near future. Auto sales fell 4.6 percent month-on-month to 1.9 million units in May, a 0.4 percent dip year-on-year, according to the China Association of Automobile manufacturers. The lackluster performance has further slowed the growth pace of the world’s largest auto market. Yao Jie, deputy secretary-general of the association, said the trend is “consistent with” the “new normal” of economic growth in China, indicating that the country’s auto sales have entered a period of slow growth. Many automakers started nationwide campaigns in April to cut prices to boost their sales.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   9.00%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     29.127

Money Market Highlights
O/N                                 10.6667
30 Days                           15.1771
90 Days                           16.5804
180 Days                         17.2323

USD 1 Month                 0.1848
USD 2 Months               0.2343
USD 3 Months               0.2861
USD 6 Months               0.4484
USD 12 Months             0.7908

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           01-Oct-15          13.65
182d         17-Dec-15         11.73
364d        02-Jun-16         14.18
2yr            27-Apr-17         13.93
3yr            29-Jun-19        14.00
5yr            13-Feb-20        14.00

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         195.90      199.40
EURUSD       1.1132       1.1334
GBPUSD       1.5418       1.5620
USDJPY        123.53       123.56
USDCHF       0.92595    0.9361
GBPEUR       1.3713       1.3917
USDZAR      12.3022      12.5056
JPYNGN      161.0997    161.2003
CHFNGN       213.02      214.71
EURNGN       222.96      224.32
GBPNGN        306.63     308.02
ZARNGN          15.09       17.01

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