A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

13 August 2015, Sweetcrude, Lagos – Local and international financial market products and services update.

NIGERIA: Following plans by United States retail giant, Walmart to enter Nigeria’s retail market, increasing greenfield investment from China, India and South Africa, foreign investments in Nigeria and other African countries are expected to reach $73.5 billion by the end of this year. A report by the African Economic Outlook (AEO) revealed that official remittances have increased six-fold since 2000 and are projected to reach $64.6 billion in 2015 with Egypt and Nigeria receiving the bulk of flows. The AEO is a product of collaborative work by three international partners: the African Development Bank (AFDB), the OECD Development Centre and the United Nations Development Programme (UNDP). Official remittances, the report added, remained the largest source of international financial flows to Africa, accounting for about 33 per cent of the total since 2010.

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: DMO sold N70b of bonds – 5year at 15.389% (+10bps) and 20year at 15.199% (-10bp) on Wednesday. Yields changed little from July auction. Results came in line with expectations and we expect to see some more demand trickle into bonds today. Secondary trading in bonds was quiet because of the auction but some demand from PFAs towards close. Even with money market short approx. N70bn, bill yields came lower because of N183bn of OMO maturity coming in today. No OMO auction is expected. O/N rates closed at 50%.

COMMODITIES: Oil extended gains after rebounding from a six-year low as U.S. government data showed crude stockpiles fell for a third week in the world’s biggest consumer. Brent for September settlement, which expires Friday, rose 23 cents to $49.89 a barrel on the London-based ICE Futures Europe exchange.

INDIA: Indian stocks rose the most in two weeks, with the benchmark index halting four days of losses, amid speculation the central bank will lower interest rates after retail inflation grew at the slowest pace since November. The Sensex added 0.5 percent to 27,640.32 at 10:32 a.m. in Mumbai, rebounding from a two-week low. Consumer prices climbed 3.78 percent from a year ago in July, compared with a forecast 4.4 percent gain, adding pressure on Governor Raghuram Rajan to lower rates. Rajan kept maintained borrowing costs at a review this month to curb Asia’s third-fastest inflation even as the government has pressured him to cut rates that are among the highest in the region.

CHINA: China’s central bank stepped up verbal support for the yuan and said it will take action when there’s excessive volatility. The currency stemmed its worst loss in two decades. There’s no basis for the depreciation to persist, People’s Bank of China Assistant Governor Zhang Xiaohui said at a rare briefing on the currency in Beijing. The adjustment spurred by Tuesday’s change to how the PBOC determines the yuan’s daily reference rate is basically already completed, she said.

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                                  43.4583
30 Days                           16.3642
90 Days                           17.3582
180 Days                         17.9825

USD 1 Month                 0.1940
USD 2 Months               0.2548
USD 3 Months               0.3093
USD 6 Months               0.5085
USD 12 Months             0.8221

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           12-Nov-15         14.78
182d         04-Feb-16        14.93
364d        04-Aug-16        15.82
2yr            27-Apr-17         15.39
3yr            29-Jun-19        15.49
5yr            13-Feb-20        15.41

Indicative Currency Exchange Rates
                         Bid          Offer
USDNG         197.00        199.50
EURUSD       1.1012        1.1214
GBPUSD       1.5513         1.5715
USDJPY        124.56        124.59
USDCHF       0.97295     0.9831
GBPEUR       1.3948        1.4152
USDZAR      12.6767      12.8801
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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