A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

20 August 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The National Bureau of Statistics on Wednesday said that the country recorded a N20bn decline in its second quarter trade. It specifically said the trade dropped from N4.392tn in the first quarter to N4.372trn in the second quarter. The bureau, in its merchandise trade report, said that the second quarter figure represented a decline of 0.5 per cent over what was traded in the first quarter. The report said relative to the preceding quarter, a rise of N214.1bn or eight per cent in the value of exports combined with a decline of N234.4bn or 13.6 per cent in the value of imports improved the country’s trade balance. The trade balance, according to the report, increased by 47.9 per cent or N448.6bn during the quarter. But the report said year-on-year, the country’s trade balance declined by 48.8 per cent as imports declined by 24.5 per cent while exports declined even further by 38.5 per cent.

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: Not much improvement in O/N rates and liquidity conditions (30%, N51bn long), but we managed to see some demand come into bills yesterday. Tbill yields traded on Tuesday around 15-16% handle but with auction expected to come in at lower yields, it was a perfect excuse for a mini rally especially on the short end. Average bill yield closed at 15.44% (-29bps). Bonds also saw some demand even though uncertainty still clouds the environment. There seemed to be some demand in bonds at 15.50% area (possibly PFA interest).

EUROPE: German MPs have voted by a large majority to approve a third bailout deal for Greece. In total 453 members of parliament voted in favour, while 113 rejected the bailout and 18 abstained. German Finance Minister Wolfgang Schaeuble had earlier warned MPs that it would be “irresponsible” to oppose the €86bn ($95bn; £61bn) package. A first tranche of about €25bn is now being made available to meet Greece’s debts and help recapitalise its banks. Greece is due to make a new debt payment to the European Central Bank on Thursday.
USA: Federal Reserve policymakers thought conditions for a US rate rise “were approaching” when they met last month, but that the economy was not ready yet.
Minutes from the Fed’s meeting on 28-29 July show one policymaker was ready to vote for a rate rise at the meeting. However, other policymakers remained concerned that inflation would remain weak because of the strong dollar and falling commodity prices. The Fed’s key interest rate has been kept near zero since December 2008.

COMMODITIES: The price of US oil has fallen to a fresh six-year low today. Last night, hopes were raised that WTI may form a base of support around the March low of $42 a barrel. It staged a sharp rally ahead of the contract rollover and prices remained elevated after the American Petroleum Institute (API) reported a sharper than expected draw of 2.3 million barrels in crude stocks. Those hopes were dashed however as the official data from the US Department of Energy revealed a completely different picture today as the level of US crude stockpiles actually increased last week, and by 2.6 million barrels, no less.

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     30.806

Money Market Highlights
O/N                                 36.6250
30 Days                           19.6766
90 Days                           22.2655
180 Days                         23.6389

USD 1 Month                 0.2020
USD 2 Months               0.2730
USD 3 Months               0.3334
USD 6 Months               0.5341
USD 12 Months             0.8496

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           12-Nov-15         15.30
182d         04-Feb-16        15.70
364d        04-Aug-16        16.31
2yr            27-Apr-17         15.50
3yr            29-Jun-19        15.50
5yr            13-Feb-20        15.45

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         196.00       199.50
EURUSD       1.1021       1.1223
GBPUSD       1.5561       1.5736
USDJPY        124.00       124.03
USDCHF       0.95995    0.9701
GBPEUR       1.3958       1.4162
USDZAR      12.8880      13.0914
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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