A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

11 August 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: In a bid to increase export capacity and support direct investment flows, the Commonwealth of Nations has vowed to support the Nigerian government to attract the right trade and investment opportunities needed to achieve economic growth and development. Director General, Commonwealth Enterprise and Investment Council, Mr. Oliver Everett explained that Nigeria must find ways to address its ease of doing business in the country, noting that it is critical to the nation’s trade and investment activities. He added that ‎Nigeria needs to keep the country open for business to solve its infrastructural issues, maintaining that the country must also ensure that there is healthy competition and good trade to solve some of its economic challenges.

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: Quiet session in bonds yesterday, tone was stronger all through the day until some selling in the last 30mins to close. Money market liquidity improved as some refund came in late Friday from FX bids but the cash wasn’t enough to put an end to the selling in bills market seen since last week. Average yield on bills still inched up by 18bps. Expect a quiet day in bonds today as the auction draws closer. O/N rates closed between 25-30%.

COMMODITIES: Oil fell amid a broader commodity decline as China’s central bank devalued its currency, making imports of raw materials more expensive in the world’s biggest consumer of metals and energy. Brent for September settlement was 34 cents lower at $50.07 a barrel on the London-based ICE Futures Europe exchange.

EUROPE: Greece reached an accord with creditors on the terms of a third bailout, paving the way for national parliaments to vote on the deal before an Aug. 20 payment falls due to the European Central Bank. After almost two weeks of intensive talks, the four institutions representing Greece’s creditors — the ECB, the International Monetary Fund, the European Commission and the European Stability Mechanism rescue fund — agreed on measures and prior actions that will unlock some 86 billion euros ($94 billion) in funds for Greece.

CHINA: China devalued the yuan by the most in two decades, a move that rippled through global markets as policy makers stepped up efforts to support exporters and boost the role of market pricing in Asia’s largest economy. The central bank cut its daily reference rate by 1.9 percent, triggering the yuan’s biggest one-day drop since China unified official and market exchange rates in January 1994. The People’s Bank of China called the change a one-time adjustment and said it will strengthen the market’s ability to determine the daily fixing. Chinese authorities had been propping up the yuan to deter capital outflows, protect foreign-currency borrowers and make a case for official reserve status at the International Monetary Fund. Tuesday’s announcement suggests policy makers are now placing a greater emphasis on efforts to combat the deepest economic slowdown since 1990 and reduce the government’s grip on the financial system.

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     31.537

Money Market Highlights
O/N                                  39.2917
30 Days                           16.2835
90 Days                           17.2557
180 Days                         18.2949

USD 1 Month                 0.1925
USD 2 Months               0.2595
USD 3 Months               0.3142
USD 6 Months               0.5197
USD 12 Months             0.8457

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           12-Nov-15         15.29
182d         04-Feb-16        15.02
364d        04-Aug-16         16.10
2yr            27-Apr-17         15.30
3yr            29-Jun-19        15.46
5yr            13-Feb-20        15.34

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         197.00       199.50
EURUSD       1.0944      1.1146
GBPUSD       1.5502       1.5704
USDJPY        124.80       124.83
USDCHF       0.97645    0.9866
GBPEUR       1.4026        1.4230
USDZAR      12.5989      12.8023
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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