A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

09 July 2015, Sweetcrude, Lagos – 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 remained at 195.95/196.95.

FIXED INCOME: Demand for short dated bills continues to gain even more momentum with money market liquidity increasing. N377.17bn vs previous day’s N274bn (caused by the recently released bailout funds). O/N rates closed lower at 5% (-300bps). In bonds, general tone remains weak but it was a quiet session today. N70bn of worth of bonds will be offered at the July 15 auction.

COMMODITIES: Oil rebounded from the biggest five-day decline in almost four years as China sought to restore investor confidence in the world’s second-largest economy. Oil has given up this year’s gains as investors avoided riskier assets amid China’s equities rout and the turmoil in Greece. U.S. crude stockpiles increased for a second week through July 3 and are almost 100 million barrels above the five-year seasonal average, government data showed Wednesday. WTI climbed by $1.04 to $52.69/bbl while Brent climbed by 89cents to $57.94/bbl

NIGERIA: Central Bank of Nigeria Governor Godwin Emefiele reiterated on Wednesday that foreign exchange controls were helping to stabilize the naira and replenish reserves; amid criticism the measures are harming the economy. “These policies have led to a significant stabilization in the exchange rate and an improvement in market sentiments,” Emefiele said in a speech to Nigeria’s Senate in the capital, Abuja. The measures, coupled with efforts by the five-week old administration of President Muhammadu Buhari to cut wasted spending “have seen our foreign exchange reserves begin a gradual recovery,” he said.

US: Regulators need help from hedge funds to make sure a bank failure in the future doesn’t roil markets the way Lehman Brothers Holdings Inc. did. The problem is that hedge funds don’t see what’s in it for them. The Federal Reserve, Federal Deposit Insurance Corp. And Bank of England have met with representatives for firms such as Citadel LLC, D.E. Shaw & Co., Black Rock Inc. and Pacific Investment Management Co. to try to persuade them to wait before cancelling contracts with a collapsing lender, said three people with knowledge of the matter.

China: China’s decision to ban major stockholders from selling stakes in listed companies has drawn scepticism from foreign investors. The money managers, with combined assets of almost $4 trillion, say the latest step to stem the country’s equity rout is just another measure to meddle in the market and won’t be enough to restore investors’ confidence. The China Securities Regulatory Commission (CSRC) said Wednesday that investors with holdings exceeding 5 percent as well as corporate executives and directors are prohibited from selling stakes for six months. The rule is intended to stabilize capital markets amid an “unreasonable plunge” in share prices, the CSRC said.

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     29.630

Money Market Highlights
O/N                                   3.7917
30 Days                           13.0302
90 Days                           15.0648
180 Days                         15.6948

USD 1 Month                 0.1885
USD 2 Months               0.2339
USD 3 Months               0.2835
USD 6 Months               0.4459
USD 12 Months             0.7504

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           24-Sep-15          13.72
182d         07-Jan-16         13.42
364d        02-Jun-16         14.36
2yr            27-Apr-17         14.79
3yr            29-Jun-19        15.02
5yr            13-Feb-20        15.01

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         195.95      199.45
EURUSD       1.0939      1.1141
GBPUSD       1.5294      1.5496
USDJPY        121.39      121.42
USDCHF       0.94335   0.9535
GBPEUR       1.3843      1.4047
USDZAR      12.3984     12.6018
JPYNGN      163.8697   163.9703
CHFNGN       208.91     210.60
EURNGN       218.99    220.35
GBPNGN        305.56   306.96
ZARNGN          14.96      16.88

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