A Review of the Nigerian Energy Industry

Financial markets products & services update

Financial markets
Financial markets

24 June 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: The Central Bank of Nigeria (CBN) on Tuesday officially stopped the sale of dollars for a list of 40 items as it seeks to reduce pressure on the naira as well as preserve the country’s external reserves. These items include rice, cement, margarine, palm kernel/palm oil products/vegetable oil, meat and processed meat products, vegetable and processed vegetable products, poultry –chicken, eggs, turkey – private airplanes/jet, Indian Incense, tinned fish in sauce – Geisha/Sardines, cold rolled steel sheet and galvanized steel sheets. Others are roofing sheets, wheel barrows, head pans, metal boxes and containers, enamelware, steel drums, steel pipes, wires, rods, wire mesh, steel nails, security and razor wire, wood particles boards and panels, wood fiber board and panels, plywood boards and wooden doors. In addition, sourcing of forex for the importation of toothpicks, glass and glassware, kitchen utensils, tables, textiles, woven fabrics, clothes, plastic and rubber products, soap and cosmetic, tomatoes/tomato paste and Eurobond/foreign currency bond/share purchase.

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: A quieter day in bonds with a weak tone. Mostly sellers of bonds seen, little buying went through. Tbill auction holds today. Small issue size (N50bn) on the one year should see street shy away from it as it may not trade in the secondary market. N31.2bn to be offered on the 91day and N39.34bn on the 182day (the 91day paper has been previously issued). Money market liquidity still low at N42.64bn but O/N rates went lower to 15% as more banks access the SLF window. Tbill yields in secondary market dropped average 10bps.

COMMODITIES: Oil prices nudged higher in Asian trade on Wednesday on hopes for stronger than expected U.S. crude demand, while doubts over the prospect of reaching an agreement next week on Iran’s nuclear program eased oversupply concerns. Brent crude for August delivery LCOc1 climbed 3 cents to $64.48 a barrel, after settling up $1.11, or 1.8 percent, in the previous session.

US: The U.S. economy is on track to grow 2.0 percent in the second quarter following data that showed gains in new and existing home sales in May, Atlanta Federal Reserve’s GDP Now forecast model showed on Tuesday. This was up slightly from the regional Fed’s prior estimate on June 16 of a 1.9 percent rise. The gain of 5.1 percent in May existing home sales and a 2.2 percent May increase in new home sales helped raise the model’s forecast on residential investment growth to 10.0 percent from 7.0 percent in the second quarter, the Atlanta Fed stated.

EUROPE: Eurozone leaders have broadly welcomed new proposals for Greek reforms amid hopes a deal can be struck within days to stop Greece defaulting on its debt. German Chancellor Angela Merkel said Greece’s latest offer constituted “some progress”. But she said more work was needed and “time is short”. Greece must repay €1.6bn (£1.1bn) to the International Monetary Fund (IMF) by the end of the month.

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     29.031

Money Market Highlights
O/N                                 22.3750
30 Days                           16.0566
90 Days                           17.4381
180 Days                         18.2597

USD 1 Month                 0.1870
USD 2 Months               0.2330
USD 3 Months               0.2808
USD 6 Months               0.4438
USD 12 Months             0.7688

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           24-Sep-15         11.28
182d         17-Dec-15         13.23
364d        02-Jun-16         14.10
2yr            27-Apr-17         13.81
3yr            29-Jun-19        13.98
5yr            13-Feb-20        14.31

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         196.00      199.40
EURUSD       1.1092       1.1294
GBPUSD       1.5688      1.5890
USDJPY        123.96      122.99
USDCHF       0.92715    0.9373
GBPEUR       1.4005      1.4209
USDZAR      12.0985    12.3019
JPYNGN      160.4997   160.6003
CHFNGN       213.02     214.71
EURNGN       222.96    224.32
GBPNGN        306.63   308.02
ZARNGN          15.09      17.01

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