A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

23 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 changed to 196.00/197.00 on Tuesday.

FIXED INCOME: It was an active bonds trading session for most of the early trading hours yesterday. Short dated tbills saw some pressure as money market becomes tighter (now sub N100bn). Auction results came in virtually unchanged from last auction, printing at yields of 10.26%, 13.50% (+3bps) and 14.945% on 91day, 182day and 364day respectively. Thursday’s ‘supposed’ CRR maintenance cycle saw no entries passed by the CBN with no reason yet for this. The market is looking forward to the outcome of MPC meeting. O/N rates closed at 25%.

COMMODITIES: Oil neared a bear market amid a rout in commodities as an unexpected increase in U.S. crude stockpiles exacerbated a glut. Oil has lost almost 20 percent the past six weeks, nearing a common definition of a bear market, amid signs the global surplus will persist. Brent traded as low as $56.05 yesterday.

NIGERIA: The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), which commences its 245th meeting this Thursday is expected to take critical decisions that would determine the fate of the naira, which has been under intense pressure at the parallel market in the past few weeks. The two-day meeting holds in Abuja. The MPC, which has operational independence in determining monetary policy will be meeting for the fourth time this year. The naira, which sells for less than N200 to a dollar on the interbank market, goes for about N240 to a dollar at parallel market points across major cities in the country.

CHINA: After assembling rescues of indebted local governments and a plunging stock market for much of the year, China’s leadership gets an opportunity to revive their narrative of economic reform at a gathering now set for October. Ahead of the Communist Party’s so-called Fifth Plenum in three months, President Xi Jinping has been gathering in recent weeks with provincial party bosses. Central to the talks has been the nation’s next five-year plan, where a key challenge will be how to deliver on promises to ease state control over
the economy. With a 2013 pledge to give a decisive role to markets seen by some investors as tarnished by regulators’ handling of a stocks surge and subsequent plunge, Xi’s blueprint could refocus attention on changes to the social and economic landscape for years to come

EUROPE: Greece passed a second bundle of policy measures demanded by the country’s European creditors as Prime Minister Alexis Tsipras urged lawmakers to stop the country being forced out of the euro. Echoing the rhetoric of the predecessors he once demonized, Tsipras said he’ll implement the creditors’ program even though he thinks the policies being imposed are wrong. He insisted he’ll do everything he can to improve the final deal. “Conservative forces within Europe still insist on their plans to kick Greece out of the euro,” Tsipras told legislators in the early hours of Thursday. “We chose a compromise that forces us to implement a program we don’t believe in and we will implement it, because the choices we have are tough.”

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   9.20%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     30.109

Money Market Highlights
O/N                                  21.1250
30 Days                           15.3835
90 Days                           16.5886
180 Days                         17.1964

USD 1 Month                 0.1870
USD 2 Months               0.2405
USD 3 Months               0.2925
USD 6 Months               0.4675
USD 12 Months             0.8046

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           29-Oct-15          14.12
182d         21-Jan-16         13.59
364d        02-Jun-16         14.19
2yr            27-Apr-17         14.77
3yr            29-Jun-19        14.89
5yr            13-Feb-20        14.65

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         196.50      199.50
EURUSD       1.0886      1.1088
GBPUSD       1.5553      1.5755
USDJPY        123.77      123.80
USDCHF       0.94925   0.9594
GBPEUR       1.4146      1.4350
USDZAR      12.3052     12.5086
JPYNGN      160.2497   160.3503
CHFNGN       207.38      209.07
EURNGN       218.24    219.60
GBPNGN        311.16     312.57
ZARNGN          15.06      16.98

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