A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

12 August 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Department of Petroleum Resources (DPR) has stated that it had commenced the implementation of Nigeria Gas Transportation Network Code (NGTNC). This is coming as the Nigeria Gas Company (NGC) has hinted that gas supply to power plants would increase to 800 million standard cubit feet by the end of 2016. The code ‎ NGTNC is a contractual framework between transporter (or network operator) and network users (known as shippers) that provides open competitive access to existing and future gas transportation infrastructure. Under the code, every gas meant for domestic use either for power, petrochemical or industrial, will have a single entry and exit point to cut short the sharp practices prevalent in the current supply and distribution system.

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: Bonds had a quiet morning yesterday. It felt firm before the slightly bearish afternoon. There was a bit of supply on the June 19s by afternoon from an offshore account and this had some ripple effect on the rest of the curve. Bill market was a mixed bag. Selling has slowed down since the FX auctions not taking out as much liquidity as had been anticipated. We expect demand in the bond market to remain soft ahead of today’s bond auction with the result to provide trading direction. O/N rates closed unchanged at 30%.

COMMODITIES: Oil rebounded from the lowest close in six years as trading volatility advanced to the highest in a month amid China’s devaluation of its currency. West Texas Intermediate for September delivery rose as much as 62 cents to $43.70 a barrel on the New York Mercantile Exchange and was at $43.40 at 4:13 p.m. Singapore time.

INDIA: India’s rupee slid to its weakest level in almost two years and stocks fell for a fourth day as China’s devaluation of the yuan roiled Asian markets. The rupee lost 1 percent to 64.8775 a dollar at 1:04 p.m. in Mumbai, after sliding to the weakest level since September 2013. The Sensex is the biggest gainer among the four largest emerging markets over the past two months, fueling optimism that India is more insulated from a slowdown in China. The rupee has dropped less than other developing Asian currencies in the past month. A weaker yuan benefits India, a net importer of Chinese goods. India runs a $42 billion trade deficit with China, data compiled by Bloomberg show.

CHINA: China’s industrial production, investment and retail data all trailed analysts’ estimates, putting additional downward pressure on an already weakening currency. Industrial output rose 6 percent in July from a year earlier, the statistics bureau said Wednesday. Weak industrial output and investment, along with an exports slump, add fresh risks to Premier Li Keqiang’s 2015 growth target of about 7 percent. China’s yuan devalued the most in two decades Tuesday and fell again Wednesday as policy makers allow markets a greater role in setting its level.

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     31.572

Money Market Highlights
O/N                                  27.6667
30 Days                           16.3020
90 Days                           17.3804
180 Days                         17.7441

USD 1 Month                 0.1934
USD 2 Months               0.2575
USD 3 Months               0.3143
USD 6 Months               0.5183
USD 12 Months             0.8387

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           12-Nov-15         15.05
182d         04-Feb-16        15.23
364d        04-Aug-16        16.13
2yr            27-Apr-17         15.35
3yr            29-Jun-19        15.55
5yr            13-Feb-20        15.43

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         197.00       199.50
EURUSD       1.1047      1.1249
GBPUSD       1.5465       1.5667
USDJPY        124.44       124.47
USDCHF       0.97705    0.9872
GBPEUR       1.3842        1.4066
USDZAR      12.7238      12.9272
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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