A Review of the Nigerian Energy Industry

Financial market products & services update.

Financial markets.
Financial markets.

11 September 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: The Nigerian National Petroleum Corporation (NNPC) has finally bowed to the pressure mounted by the International Association of Independent Tanker Owners (INTERTANKO) and lifted a ban on 113 foreign vessels, mostly very large crude carriers (VLCCs) into Nigeria’s territorial waters less than two months after the ban was imposed.
Acting on the directive of President Muhammadu Buhari, NNPC imposed the ban shortly after Buhari assumed office over concerns that most of the tankers were complicit in incidents of crude oil theft from Nigerian oil terminals.
INTERTANKO, whose members were mostly affected by the ban of the 113 vessels, is one of the largest groups in the shipping industry with 207 full members and 285 associate members, and a registered fleet of over 3,000 tankers of over 270 million DWT (deadweight).

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. The downward trend in gross FX reserves continued with the latest updated figure as at 07.09.2015 reported at $31.013 bn, the lowest level since 24.07.2015.

FIXED INCOME: There was virtually no supply from offshore accounts yesterday contrary to street expectation. Bullish bond market yesterday as local players picked up bonds to cover short positions.
Liquidity increased to NGN 415bn due to OMO maturity of NGN 102bn. Money market remains long.

U.S: A week before the Federal Reserve’s most critical policy decision in years, Wall Street opinion makers can’t agree on anything. Not only is there no consensus about whether the Fed will end its seven-year-old policy of zero interest rates, but views on the fallout from such a move are wildly disparate.
There are some, like hedge-fund titan Ray Dalio, who say a rate increase will prove an epic blunder in the face of a vulnerable global economy, prompting policy makers to abruptly reverse course and start printing money again. There are others, such as Citigroup Inc. economist William Lee, who says the economy is healthy enough seven years after the financial crisis to withstand higher rates. Next week’s increase would be the first of several over the course of the next year, they argue.

CHINA: The Yuan traded in Hong Kong was set for its biggest weekly advance since March after China’s central bank was seen taking the unusual step of extending its currency- support measures to the offshore market.
This was the latest in a series of extraordinary moves aimed at arresting capital outflows and countering Yuan depreciation pressure following the largest devaluation in more than two decades. The offshore currency’s unprecedented 3.48 percent retreat in August has brought Hong Kong’s Dim Sum bond market to a halt, complicating efforts to promote the Yuan’s use abroad.

COMMODITIES: Copper is heading for the biggest weekly increase since early May amid signs that supply is tightening and demand improving. All industrial metals climbed this week, with the LME Index rising to the highest since July as turmoil in China’s financial markets subsided. Copper prices were boosted by Glencore Plc’s announcement of production cuts in Africa, while stockpiles in bonded warehouses in China, the world’s biggest consumer, dropped to the smallest in 21 months.

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     30.944

Money Market Highlights
O/N                                   8.2917
30 Days                           15.1584
90 Days                           16.0883
180 Days                         17.4990

USD 1 Month                 0.2040
USD 2 Months               0.2685
USD 3 Months               0.3330
USD 6 Months               0.5390
USD 12 Months             0.8545

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           10-Dec-15          13.87
182d         17-Mar-16         14.87
364d         01-Sep-16         15.83
2yr            31-Apr-17         16.26
3yr            30-May-18       16.32
5yr            13-Feb-20        16.21

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         196.00        199.50
EURUSD       1.1201        1.1403
GBPUSD       1.5349        1.5551
USDJPY        120.92        120.95
USDCHF       0.97265     0.9828
GBPEUR       1.3620        1.3824
USDZAR      13.7335      13.9369
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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