A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets
*Financial markets

14 September 2015, Sweetcrude, Houston – Local and international financial market products & services update.
NIGERIA: The nation’s Consumer Price Index which measures inflation rose again in August to 9.3%, an increase of 0.1% over the July figure, and staying above the Central Bank of Nigeria’s target upper limit, the National Bureau of Statistics said in its monthly report on Sunday. Food inflation rose marginally to 10.1% year-on-year in August versus 10.0% in July.
“The marginal increase was as a result of slower increases in alcoholic beverages, tobacco and kola, health, transport and recreation and culture divisions,” the NBS said.
“On a month-on-month basis, the pace of increases of food prices … has slowed, contributing to the relatively slower (overall) pace of increases,” it added. The nation’s inflation rate rose above the central bank’s upper limit of 9% per cent in June and is at the highest level since February 2013.

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: A decent demand for Bond and T-bills was seen on Friday as liquidity in the system is still copious. Some whispers of offshore accounts selling the long end in decent size. This supply seemed to have been well-received by the buyers and did not have much price impact.

U.S: The dollar inched lower on Monday with investors sticking to the sidelines as the countdown begins on whether the Federal Reserve will hike interest rates for the first time in nearly a decade.
The euro edged up 0.1% to $1.1350 per EUR, holding on to last week’s 1.8% gain. The dollar eased 0.1% to 120.42 per JPY.
Against a basket of six major currencies, the dollar .DXY eased 0.1% to 95.067.
Even the disappointing set of Chinese data released on Sunday failed to stir the market. Growth in China’s investment and factory output missed forecasts in August, raising the risk that economic growth may slow below 7% in the third quarter for the first time since the global financial crisis.

CHINA: China’s Yuan erased early losses and firmed on Monday afternoon, supported by suspected intervention by the central bank via Yuan-purchases by state-owned banks, traders said.
The suspected intervention offset the early losses on the Yuan, which were possibly triggered by a Sunday report from Bank for International Settlements (BIS) that capital outflows in Chinese banks in the first quarter of 2015 and weak incentives to hold Yuan positions indicated capital may keep trickling out. Pressure on the currency from fund outflows has increased since the surprise devaluation of the Yuan on Aug. 11. The People’s Bank of China (PBOC) set the midpoint rate CNY=SAEC at 6.3709 per dollar prior to market open, 0.02% firmer than the previous fix at 6.3719.

COMMODITIES: In shale strongholds of North Dakota and Texas, physical crude grades are trading at the highest premiums to futures prices in years, offering a glimmer of hope that a pickup in global oil markets might follow.
While crude futures hover around 6-1/2-year lows, the cash markets, where producers and refiners buy and sell physical barrels of oil, are sending a more optimistic, if short-term, signal. West Texas Intermediate crude delivered to Midland, Texas WTC-WTM, at the heart of the Permian Basin, is trading at a record $2.75 premium to benchmark U.S. futures.

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                           15.3430
90 Days                           16.1916
180 Days                         17.4131

USD 1 Month                 0.2065
USD 2 Months               0.2713
USD 3 Months               0.3372
USD 6 Months               0.5407
USD 12 Months             0.8556

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           10-Dec-15          13.85
182d         17-Mar-16         14.86
364d         01-Sep-16         16.02
2yr            31-Apr-17         15.57
3yr            30-May-18       15.83
5yr            13-Feb-20        16.06

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         196.00        199.50
EURUSD       1.1237        1.1439
GBPUSD       1.5358        1.5560
USDJPY        120.18        120.21
USDCHF       0.96555     0.9757
GBPEUR       1.3533        1.3737
USDZAR      13.5151       13.7185
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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