A Review of the Nigerian Energy Industry

Financial market products & services update


17 June 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Governors of the 36 states of the federation will meet today to consider proposals for a possible bailout for states with financial difficulties, especially those unable to pay workers’ salaries. Also, the governors are expected to discuss their dwindling monthly allocations from the Federation Account and the status of the Excess Crude Account (ECA). Last month, governors on the platform of the All Progressives Congress (APC) had met with President Buhari requesting a bailout to enable them pay the backlog of salaries to workers in the states.
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.
FIXED INCOME: Quiet day in bonds but the weakness continued ahead of the auction albeit marginal. Only a handful of trades went through. Bill auction today and we saw some positioning yesterday. Average yield increased +16bps to close at 13.58% yield. On offer is N26.3bn 91day, N25bn 182day and N92.34b 364day paper. Expect a quiet day today as everyone awaits auction results. O/N rates remained unchanged at 14%. Money market is long NGN117bn.
US: U.S. government debt held by the public is expected to rise to 107 percent of the economy in 2040 from 74 percent this year, the Congressional Budget Office said, citing an aging population and rising health-care costs. With debt “already unusually high” relative to gross domestic product, “further sustained increases could be especially harmful to economic growth,” the CBO said in a long-term fiscal report released Tuesday in Washington. “To put the federal budget on a sustainable path for the long term, lawmakers would have to make major changes to tax policies, spending policies, or both.”
EUROPE: UK unemployment has fallen again while wage growth has hit a near four-year high, official figures have shown. The number of people out of work between February and April fell by 43,000 to 1.81 million, the Office for National Statistics said. The jobless rate held steady at 5.5%, the lowest level since August 2008. Meanwhile wage rises grew at their fastest rate since August 2011, rising 2.7%, both including and excluding bonuses.
COMMODITIES: Trading volume in New York oil futures is overtaking London’s Brent as the shale boom bolsters the U.S. benchmark’s clout in global crude markets. The aggregate daily volume of West Texas Intermediate futures traded on the New York Mercantile Exchange averaged about 840,000 contracts in the first five months of the year, up 46 percent from the 2014 average, according to reports. That’s more than about 705,000 for Brent traded on the ICE Futures Europe Exchange.

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     29.099

Money Market Highlights
O/N                                 14.2917
30 Days                           15.7796
90 Days                           16.8401
180 Days                         17.7776

USD 1 Month                 0.1850
USD 2 Months               0.2343
USD 3 Months               0.2863
USD 6 Months               0.4519
USD 12 Months             0.7897

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           01-Sep-15          12.31
182d         17-Dec-15         12.96
364d        02-Jun-16         14.11
2yr            27-Apr-17         13.84
3yr            29-Jun-19        14.08
5yr            13-Feb-20        14.09

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         195.90      199.40
EURUSD       1.1175       1.1377
GBPUSD       1.5640      1.5842
USDJPY        123.90      123.93
USDCHF       0.92185    0.9320
GBPEUR       1.3858       1.4062
USDZAR      12.3386      12.5420
JPYNGN      160.5397    160.6403
CHFNGN       213.02      214.71
EURNGN       222.96      224.32
GBPNGN        306.63     308.02
ZARNGN          15.09       17.01

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