A Review of the Nigerian Energy Industry

Financial market products & services update

Financial market update.
Financial market update.

04 August 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigerian President Muhammadu Buhari demands additional cuts to recurrent expenditure in the proposed 2016 budget after meeting with a planning body, his office says in e- mailed statement. Buhari “ordered the National Planning Commission to go back to the drawing board and produce the framework for a 2016 national budget that will reduce recurrent expenditure and prioritize developmental projects”.

FX: No significant change in the market as the two way quote FX market remains shut. Special auction funds still maintained at 196.00/197.00.

FIXED INCOME: Soft start to the week in bonds, 13bps wider with client (offshore) flows skewed to selling with the noise of JPM reducing Nigeria’s weight in the GBI-EM index. Very limited buying across the bond curve yesterday, bond dealers still trying to keep books light ahead of the auction next week. In bills, OMO sale continues to be the driver of the weakness seen. N33.657bn of 348day paper sold at a yield of 16.16%. O/N rates closed at 9% with money market long N311.61bn. Bill auction on Wednesday. On offer is N45.17bn 91day, N30bn 182day and N120bn 364day.

COMMODITIES: Oil in New York held near a four-month low after Brent crude slumped below $50 a barrel for the first time since January on Monday as Iran pledged almost an immediate output increase after sanctions. Brent for September settlement slid $2.69, or 5.2 percent, to $49.52 a barrel on the London-based ICE Futures Europe exchange on Monday, the lowest close since Jan. 29.

EUROPE: EU Commissioner Pierre Moscovici said in a Greek newspaper that “the economic situation has deteriorated markedly compared to the beginning of the year and there is agreement that this needs to be taken into account when deciding on the fiscal targets,” EU Commission spokeswoman Mina Andreeva says. Fiscal targets and other economic “and fiscal information is part of the talks that are right now ongoing in Greece because we need to reflect in the negotiations the latest economic and fiscal information available,” Andreeva tells reporters in Brussels.

INDIA: Indian central bank Governor Raghuram Rajan kept interest rates unchanged, rebuffing pressure from the Finance Ministry to reduce borrowing costs that are among the highest in Asia. Rajan left the benchmark repurchase rate at 7.25 percent after three cuts this year, including in June, the Reserve Bank of India said in a statement in Mumbai on Tuesday. Rajan wants to ensure his inflation target of 6 percent by January isn’t at risk from surging food prices, a poor monsoon and a possible increase in U.S. interest rates next month. A Finance Ministry official on Monday said inflation can’t be the primary concern of policy makers, the latest sign of growing tensions with the central bank.

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     31.459

Money Market Highlights
O/N                                   8.8750
30 Days                           13.5577
90 Days                           15.8633
180 Days                         16.7439

USD 1 Month                 0.1905
USD 2 Months               0.2457
USD 3 Months               0.3037
USD 6 Months               0.4876
USD 12 Months             0.8088

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           29-Oct-15          14.12
182d         21-Jan-16         14.49
364d        02-Jun-16         14.52
2yr            27-Apr-17         14.97
3yr            29-Jun-19        15.04
5yr            13-Feb-20        14.91

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         197.00       199.50
EURUSD       1.0864      1.1066
GBPUSD       1.5481       1.5683
USDJPY        124.00       124.03
USDCHF       0.96295    0.9731
GBPEUR       1.4101        1.4313
USDZAR      12.5430      12.7464
JPYNGN      160.3597    160.4603
CHFNGN       204.99      206.68
EURNGN       217.24       219.60
GBPNGN        309.40     310.79
ZARNGN          14.69      16.61

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