A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

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

NIGERIA: Nigerian National Petroleum Corp. Managing Director Emmanuel Kachikwu said he would conduct a forensic audit into the opaque accounts of the state oil company. The audit will cover “all the way to 2014, 2015” and the NNPC will review all contracts with its joint venture partners and production-sharing agreements, Kachikwu told reporters on Thursday in the capital, Abuja. Kachikwu, a former vice-chairman of Exxon Mobil Africa, was appointed this month by President Muhammadu Buhari to head the NNPC. Buhari made cleaning up the 24,000-employee colossus — the largest government-owned company — a key plank in the election campaign that toppled Goodluck Jonathan from power in March.

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: Bill yields were still tracking money market conditions yesterday. Money market now long N125bn, but trend will be for O/N rates to move north barring any CRR credits as banks fund N70bn today for bond auction. Relief that N183bn of OMO maturity brought appears to be short-lived, so we saw bill yields erase on Wednesday’s gains. Post auction, bonds yields opened south but closed slightly higher (average +3bps) led by the Aug 2016s which stops 2-WQ trading next week. Bond market was largely quiet overall. O/N rates closed at 15%. Expect quiet markets tomorrow especially in bonds.

COMMODITIES: Oil headed for the longest run of weekly declines since January amid signs the global glut that’s driven prices to the lowest in six years will be prolonged. Brent for September settlement, which expires Friday, was 10 cents lower at $49.12 a barrel on the London-based ICE Futures Europe exchange.

EUROPE: Euro-area economic growth unexpectedly slowed last quarter as expansion in its three largest economies fell short of estimates, highlighting the fragility of the recovery amid uncertainty surrounding the global outlook. Gross domestic product in the 19-nation region rose 0.3 percent, data on Friday showed. Germany’s economy grew 0.4 percent, Italy’s 0.2 percent, while France stagnated. With China jolting global markets by devaluing its currency and Greece on the verge of a new bailout program, the euro area’s nascent revival may yet struggle. European Central Bank policy makers meeting in July called the recovery “disappointing” and said they’re ready to adjust stimulus if needed, a summary of the discussions showed on Thursday.

CHINA: Yuan positions at China’s central bank and financial institutions fell by the most on record in July, a sign capital outflows picked up and the central bank stepped up intervention to support the yuan. Yuan positions on the balance sheet of the People’s Bank of China totaled 26.4 trillion yuan ($4.13 trillion) at the end of July, according to data on the authority’s website. That’s a drop of 308 billion yuan from a month earlier, based on Bloomberg calculations. Yuan positions at Chinese financial institutions accumulated from foreign-exchange purchases fell by 249.1 billion yuan to 28.9 trillion yuan.

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     31.624

Money Market Highlights
O/N                                  27.9583
30 Days                           16.5285
90 Days                           18.0588
180 Days                         17.9825

USD 1 Month                 0.1976
USD 2 Months               0.2624
USD 3 Months               0.3205
USD 6 Months               0.5186
USD 12 Months             0.8349

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           12-Nov-15         14.65
182d         04-Feb-16        15.02
364d        04-Aug-16        16.31
2yr            27-Apr-17         15.39
3yr            29-Jun-19        15.50
5yr            13-Feb-20        15.38

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         197.00       199.50
EURUSD       1.1055      1.1257
GBPUSD       1.5523       1.5725
USDJPY        124.23       124.26
USDCHF       0.96895    0.9791
GBPEUR       1.3904        1.4108
USDZAR      12.7380      12.9414
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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