A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

28 July 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria’s gross government revenues rose in June for the second month in a row to reach 485.95 billion naira ($2.44 billion), the finance ministry said, partly due to a crackdown on official corruption. The total of 518.542 billion naira, up 33 percent from May, included a 6.33 billion refund by the state oil company, value-added tax of 64.99 billion naira and an exchange rate gain of 6.69 billion naira. In May, Nigeria received 324.06 billion naira in revenues and distributed 409.35 billion naira between the federal, state and local governments. The balance of the Excess Crude Account stood at $2.207 billion, up from $2.078 billion on June 23. International oil prices rose at the end of April and benchmark Brent futures were sustained in the $60s a barrel range before falling again into the $50s a barrel range at the start of July. Africa’s biggest oil producer depends on oil sales for about 70 percent of its government revenues.

FIXED INCOME: Unsuccessful OMO auction as liquidity from CRR credit was not enough to spur healthy demand at the auction. Money market long N167bn with O/N rates closing lower at 13%. Average bond yields closed 16bps wider while we saw buyers in bills because liquidity conditions seem to be improving (FAAC in sometime this week).

CHINA: China’s economy still faces downward pressure and growth momentum is “insufficient”, the country’s top economic planning agency said on Tuesday. The flow of capital into the real economy is not smooth, Li Pumin, secretary general of the National Development and Reform Commission (NDRC), told a news conference in Beijing. Speaking at the same briefing, Gao Gao, vice-director of the integration department of the NDRC, said that he was not optimistic on the outlook for external demand.

EUROPE: The outlook for the eurozone has improved, says the International Monetary Fund (IMF), thanks to a falling oil price, a weaker euro and action taken by the European Central Bank (ECB). It predicted that growth would pick up to 1.7% next year, from 1.5% this year. However, the IMF warned that the region was still “vulnerable to shocks”. This could tip the block into “prolonged stagnation,” the fund said in its latest assessment of the region. It cited uncertainty arising from the situation in Greece as a potential trigger for such a shock, saying that further volatility from the situation could not be ruled out. Greece is currently negotiating its third bailout with creditors.

COMMODITIES: Oil prices fell for a fifth straight session to their lowest in almost six months, as a rout in Chinese equities cast further doubt over the outlook for crude demand in the world’s top commodities consumer. China’s already-volatile benchmark stock index, with a combined market capitalization of $4.6 trillion, has lost 10 percent in the last two days of trade. Brent had fallen 78 cents to $52.69 a barrel, having hit a session low of $52.28, its lowest since early February, bringing the losses for July to nearly 18 percent.

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     30.845

Money Market Highlights
O/N                                 12.2500
30 Days                           15.4717
90 Days                           16.5989
180 Days                         17.5475

USD 1 Month                 0.1890
USD 2 Months               0.2430
USD 3 Months               0.2941
USD 6 Months               0.4690
USD 12 Months             0.8010

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           29-Oct-15          13.95
182d         21-Jan-16         13.78
364d        02-Jun-16         14.39
2yr            27-Apr-17         14.78
3yr            29-Jun-19        14.92
5yr            13-Feb-20        14.71

Indicative Currency Exchange Rates
                          Bid        Offer
USDNG         196.00      199.50
EURUSD       1.0964     1.1166
GBPUSD       1.5446      1.5648
USDJPY        123.63      123.66
USDCHF       0.95925   0.9694
GBPEUR       1.3949      1.4153
USDZAR      12.5165     12.7199
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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