A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

26 August 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Growth in the Nigerian economy, Africa’s largest, slowed in the second quarter due to the slump in oil prices, the country’s statistics office said. Gross domestic product expanded 2.35 percent on an annual basis, compared with 3.96 percent a quarter earlier, the head of the National Bureau of Statistics, Yemi Kale, said on his Twitter account on Tuesday. The oil industry contracted 6.8 percent, Kale said. The oil-price slump has forced Africa’s top crude producer to cut its budget and deplete foreign-currency reserves to stem depreciation in the currency, which has declined 7.8 percent against the dollar this year. The Nigerian Stock Exchange All Share Index fell to the lowest in six months on Tuesday on concern that oil prices near a six-year low will deepen the country’s 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: Some breather on Tuesday in bonds as the supply from offshore accounts seems to be drying up. Demand still apparent on the July 2034s even though we were mostly quiet across the rest of the bond curve. Exact opposite in bills though – more sell off seen, with yields up average 40bps because money market remains tight with no support till Thursday. O/N rates closed higher at 60%. China’s slowing growth and pressure on oil remain the main cause of the general risk off mode. Expect a subdued session tomorrow in fixed income.

COMMODITIES: Oil swung between gains and losses in New York amid speculation U.S. crude stockpiles expanded for a second week. Brent for October settlement was 38 cents higher at $43.59 a barrel on the London-based ICE Futures Europe exchange. It advanced 52 cents to $43.21 on Tuesday.

EU: European Commission President Jean-Claude Juncker promised his investment plan would pump 315 billion euros ($361 billion) into the European Union’s economy. A month after winning approval from EU nations and the European Parliament, the projects are starting to roll out under the plan and banks and national development authorities are signing on, giving taxpayers and financial markets a first chance to see the program in action as they assess whether they think it will work. The investment program was designed to bolster the European Investment Bank so it can take more risk in picking projects to support. The program also targets small and medium-sized businesses through collaboration with the European Investment Fund, a part of the EIB that focuses on start-up firms and smaller companies.

CHINA: China’s stocks extended the steepest five- day drop since 1996 in volatile trading as lower interest rates failed to halt a $5 trillion rout. The Shanghai Composite Index fell 1.3 percent to 2,927.29 at the close, after rising as much as 4.3 percent and declining 3.9 percent. The cuts in borrowing costs and lenders’ reserve ratios were announced hours after the benchmark measure closed with a 7.6 percent drop on Tuesday. Chinese equities have lost half their value since mid-June, as margin traders closed out bullish bets and concern deepened that valuations are unjustified by the weak economic outlook. The government has halted intervention in the equity market this week as policy makers debate the merits of an unprecedented rescue, according to people familiar with the situation.

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     31.474

Money Market Highlights
O/N                                  47.1250
30 Days                           18.5054
90 Days                           20.4074
180 Days                         22.1277

USD 1 Month                 0.1977
USD 2 Months               0.2621
USD 3 Months               0.3270
USD 6 Months               0.5228
USD 12 Months             0.8273

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           26-Nov-15        15.86
182d         25-Feb-16        16.77
364d        04-Aug-16        15.76
2yr            27-Apr-17         15.69
3yr            29-Jun-19        15.78
5yr            13-Feb-20        15.69

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         197.00      199.50
EURUSD       1.1377       1.1579
GBPUSD       1.5582       1.5784
USDJPY        119.51        119.54
USDCHF       0.93695    0.9471
GBPEUR       1.3562        1.3766
USDZAR      13.0297      13.2331
JPYNGN      161.8497    161.9503
CHFNGN       204.99      206.68
EURNGN       217.24       219.60
GBPNGN        309.40     310.79
ZARNGN          14.69      16.61

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