A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.
*Financial markets.

22 September 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Association of Bureau de Change Operators of Nigeria (ABCON) have condemned the clamour for further depreciation of the naira by some analysts and investors.
The association stated this at the end of a forum it held in Lagos recently. It also pledged to support the Central Bank of Nigeria (CBN) to ensure exchange rate stability.
According to the Managing Director/Chief Executive, Sabil BDC, Alhaji Aminu Gwadabe, the forum also resolved to hold monthly meetings with the aim of reviewing developments in the sub-sector. Identifying the need for professionalism among BDC operators, the forum pledged to institute a robust supervision and sanction regime in the sub-sector.
To complement this, the forum decided to set up a taskforce on compliance and ethics for the industry.

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. Gross external reserves fell to $30.597 bn as at the 17th of September.

FIXED INCOME: Bonds and bills remained well bid but both markets also felt quiet yesterday. With street pricing in the possibility of a CRR cut (which will ease liquidity) at today’s MPC, we expect demand to persist. Bill auction on Wednesday and settlement expected to be Monday because of the Eid shortened week. On offer is N31.19bn 91day, N10.61bn 182day and N59.08bn 364day. O/N rates closed at 20%.

EURO: Euro-area government bonds rose after European Central Bank Executive Board member Peter Praet said policy makers would “forcefully react” to defend their inflation objective.
Italian securities led gains across the region as Praet said in a speech in Geneva the ECB will “certainly do what’s necessary.” Since the ECB started its 1.1-trillion-euro ($1.2 trillion) asset-purchase program in March, inflation in the currency bloc has slowed to a near standstill. It remains far less than the ECB’s goal of just below 2%, with consumer prices rising 0.1% in August from a year earlier. Italy’s 10-year bond yield fell 3bp, or 0.03% point, to 1.78% at 8:44 a.m. London time. The 1.5% security due in June 2025 rose 0.23 or 2.30 Euros per 1,000-euro face amount, to 97.59.The yield on similar-maturity Spanish bonds declined one basis point to 1.99%.

INDIA: India’s rupee rose to a one-month high as stocks climbed after the Federal Reserve opened an investment window for emerging markets by refraining from raising interest rates for now.
Global funds purchased $116.5 million more Indian shares than they sold on Sept. 18, the most recent data compiled by Bloomberg show. It seems a U.S. rate increase is still on the cards after Fed Bank of Atlanta chief Dennis Lockhart joined policy heads in San Francisco, St. Louis and Richmond in saying borrowing costs should be raised before year-end, with two remaining meetings in October and December.

COMMODITIES: Oil halted a surge above $46 as investors weighed Iran’s progress toward raising output amid a market glut against signs of reduced U.S. supplies. Futures fell as much as 1.5% in New York, after rebounding 4.5% on Monday. Iran took another step toward implementing a deal to curb its nuclear program in return for sanctions relief that will allow the OPEC member to boost crude exports.

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     30.597

Money Market Highlights
O/N                                 20.0000
30 Days                           15.7973                                                                                                                            90 Days                          16.7238
180 Days                         17.6115

USD 1 Month                 0.1950
USD 2 Months               0.2554
USD 3 Months               0.3260
USD 6 Months               0.5255
USD 12 Months             0.8388

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           24-Dec-15          11.34
182d         17-Mar-16         14.82
364d         01-Sep-16         15.07
2yr            31-Apr-17         15.16
3yr            30-May-18       15.15
5yr            13-Feb-20        15.23

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         196.00        199.50
EURUSD       1.1064         1.1266
GBPUSD       1.5376         1.5578
USDJPY        120.04        120.07
USDCHF       0.96885     0.9790
GBPEUR       1.3760        1.3964
USDZAR      13.6841       13.5875
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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