A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

01 September 2015, Sweetcrude, Houston – Local and international financial market products and services update.

NIGERIA: The Permanent Secretary, Ministry of Lands, Housing and Urban Development, Mr. George Ossi, Monday said government is developing a blueprint to reduce the cost of housing delivery by 30 per cent. Ossi in the statement averred that government will intervene through the provision of land, infrastructure, and payment of compensation to land owners. According to him, the overall effect of the reduction will positively impact on the 17 million housing deficit.

EU: Inflation in the 19-nation eurozone was stable in August at an annual rate of 0.2 percent, according to the European Union’s statistics agency, Eurostat. A large drop in energy prices made up for increases in the costs of food, alcohol and tobacco, services and industrial goods. Still, the figures remains far below the European Central Bank’s aim for an annual rate of just under 2 percent. The central bank’s president, Mario Draghi, said it would continue its 1.1 trillion euro ($1.2 trillion) stimulus program until inflation turned up convincingly, implying the stimulus could be continued beyond September next year. The bank publishes new inflation projections after its governing council meeting on Thursday, which could provide clues to the bank’s future stance.

CHINA: China’s benchmark money-market rate fell for the first time in three days on speculation the central bank will keep pumping cash into the financial system to replace funds being pulled out by intervention in the currency market. The People’s Bank of China has stepped up sales of reverse-repurchase agreements, and conducted Short-term Liquidity Operations to boost cash supply in the past two weeks. The monetary authority has been buying yuan to support the exchange rate since a surprise devaluation on Aug. 11. The official manufacturing Purchasing Managers’ Index for August dropped to a three-year low, according to figures released Tuesday.

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: The week started on a quiet note yesterday the bond space. Most of the flows seen last week had been from offshore accounts. A bit of activity though on the July 2034s from locals but daily volume across the rest of the curve was well below average (N526mm vs. N25bn average this month). Tbills saw more demand especially on the 91day paper (3 dec.). This is being offered at Wednesday’s auction and looked cheap following last week’s selloff. Another uneventful OMO auction yesterday as the market pushes for higher yields and CBN reluctant to budge. O/N rate closed at 9%

COMMODITIES: Oil’s biggest three-day rally in 25 years stalled before U.S. government data forecast to show crude stockpiles expanded in the world’s largest oil consumer. West Texas Intermediate for October delivery dropped as
much as $1.97 to $47.23/bbl. Brent for October settlement decreased as much as 3.7% to $52.16/bbl.

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     31.398

Money Market Highlights
O/N                                  10.1250
30 Days                           16.0298
90 Days                           17.3473
180 Days                         18.1851

USD 1 Month                 0.1986
USD 2 Months               0.2663
USD 3 Months               0.3290
USD 6 Months               0.5343
USD 12 Months             0.8433

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           03-Dec-15         10.53
182d         03-Mar-16        15.60
364d        04-Aug-16         15.77
2yr            27-Apr-17         15.81
3yr            29-Jun-19        15.92
5yr            13-Feb-20        15.88

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         197.00       199.50
EURUSD       1.1218        1.1420
GBPUSD       1.5295       1.5497
USDJPY        120.23        120.26
USDCHF       0.95415    0.9643
GBPEUR       1.3501        1.3705
USDZAR      13.1786      13.3820
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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