A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets.
Financial markets.

09 September 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: JPMorgan Chase & Co. has excluded Nigeria from its local-currency emerging-market bond indexes tracked by more than $200 billion of funds, after restrictions on foreign-exchange transactions prompted investor concerns about a shortage of liquidity. The first phase of removing Africa’s biggest economy from the Government Bond Index-Emerging Markets, or GBI-EM, will take place at the end this month followed by a full exit by the end of October, the New York-based lender said in a statement. Nigeria’s central bank under Governor Godwin Emefiele introduced several foreign-exchange trading restrictions from December to stem the drop of the naira amid weaker oil prices. JPMorgan placed Nigeria on index watch in January, saying the foreign-exchange measures made it more difficult for foreign investors to replicate the gauges.

FIXED INCOME: Risk off has been the order of the month and with news of Nigeria being kicked out of the JPM EM Index, things are looking bleak. We expect bill market to be equally bearish because of the activities in bonds.
O/N rates closed at 10% yesterday.

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.

EU: Economic growth in the 19 countries that make up the eurozone has been revised upwards. The second estimate of gross domestic product (GDP) for April to June put growth at 0.4%, up from the first estimate of 0.3%. The European statistics agency Eurostat also revised growth in the first quarter, from 0.4% to 0.5%. Also on Tuesday it was announced that German imports and exports had both reached record levels. Boosted by the continuing weakness of the euro, exports rose 2.4% to €103.4bn ($115.5bn; £75.1bn) in July, the federal statistics office Destatis estimated, after adjusting for seasonal and calendar effects. Imports also rose, but not by as much, meaning the trade surplus grew to a record €25.0bn.

CHINA: China’s economic fundamentals are healthy, the head of the country’s top economic planner said on Wednesday. “China has contributed around 30 percent of the world’s economic growth,” Xu Shaoshi, chairman of the National Development and Reform Commission (NDRC), said at the World Economic Forum (WEF). The world’s second-largest economy grew 7 percent in the first half from a year earlier – in line with the government’s target for 2015, but recent downbeat data has raised the risk the government could miss its full-year growth target.

COMMODITIES: Oil swung between gains and losses near the lowest price in a week as investors weighed rising crude stockpiles in the U.S. against a rally across equities and emerging-market currencies. West Texas Intermediate for October delivery was at $45.63 a barrel on the New York Mercantile Exchange, down 31 cents.

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     31.013

Money Market Highlights
O/N                                   8.2917
30 Days                           15.7159
90 Days                           16.8753
180 Days                         18.1676

USD 1 Month                 0.2027
USD 2 Months               0.2690
USD 3 Months               0.3330
USD 6 Months               0.5418
USD 12 Months             0.8601

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           17-Dec-15          12.02
182d         17-Mar-16        14.91
364d        04-Aug-16         15.69
2yr            27-Apr-17         16.23
3yr            29-Jun-19        16.21
5yr            13-Feb-20        16.11

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         196.00        199.50
EURUSD       1.1093        1.1295
GBPUSD       1.5265        1.5467
USDJPY        120.52        120.55
USDCHF       0.96935    0.9795
GBPEUR       1.3625        1.3829
USDZAR      13.5372      13.7406
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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