A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

23 September 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday warned that the country’s economy could slip into recession by next year if proactive steps were not taken by the Federal Government to revive key sectors.
It also reduced the Cash Reserves Requirements for banks from 31% to 25%; but retained the Monetary Policy Rate at 13%.
The committee also retained the symmetric corridor of 200 basis points around the MPR; and left the liquidity ratio unchanged at 30%.
Addressing journalists shortly after the two-day meeting of the committee held at the bank’s headquarters in Abuja, the CBN Governor, Mr. Godwin Emefiele, noted that the nation’s economy had remained fragile owing to various factors.

FX: The MPR yesterday had no change to the current FX policy. The special auction funds still maintained at 196.00/197.00.

FIXED INCOME: The market is expected to be bullish today with the 6% reduction in CRR. An estimate of N 765bn net inflow into the system is expected to drive Yields down.
This also means that banks are in no worse shape than they were pre-TSA implementation. Though street consensus was for the CRR cut, bill market saw some selling in secondary market because of current liquidity conditions.

U.K: Stocks rebounded from their lowest level in almost a month as gains in banks and energy companies outweighed further evidence of China’s economic slowdown.
HSBC Holdings Plc led lenders higher, rising 1.6%. Premier Oil Plc led oil-and-gas gains, jumping 12% after saying that production is ahead of its 2015 guidance. BBA Aviation Plc slid 4.5% after agreeing to buy Carlyle Group LP’s Landmark Aviation for $2.07 billion.
The FTSE 100 Index climbed 0.5% to 5,965.2 at 8:33 a.m. in London. Shares slid yesterday amid a global selloff exacerbated by concerns over international growth prospects and a tumble in European carmakers following the emission-test cheating scandal at Volkswagen AG.

US: Treasuries advanced for a second day as a decline in stocks around the world drove demand for the relative safety of sovereign debt.
U.S. government securities have returned 0.5% in September, based on Bloomberg bond indexes, rebounding from an August loss after the Federal Reserve opted against raising interest rates at a meeting last week. Policy makers said they’re watching the global economy while debating when to end their six-year run of record-low borrowing costs.
The U.S. 10-year yield fell two basis points, or 0.02% point, to 2.12% as of 7:09 a.m. in London, according to Bloomberg Bond Trader data.

COMMODITIES: Oil rose amid forecasts for a drop in U.S. crude inventories and deeper cuts to investment by one of the largest international oil companies.
Futures advanced 0.8% in New York. U.S. stockpiles probably shrank by 1.25 million barrels through Sept. 18 for a second weekly decline, according to a Bloomberg survey before government data Wednesday.
Brent has fluctuated since sliding below $45 a barrel last month as concern over China’s growth fuelled volatility in global markets.

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     30.539

Money Market Highlights
O/N                                 25.1250
30 Days                           16.0619                                                                                                                            90 Days                          17.0759
180 Days                         18.3199

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          12.14
182d         24-Mar-16         14.27
364d         01-Sep-16         15.27
2yr            31-Apr-17         15.20
3yr            30-May-18       15.20
5yr            13-Feb-20         15.16

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         196.00        199.50
EURUSD       1.1025        1.1227
GBPUSD       1.5233         1.5435
USDJPY        120.21         120.24
USDCHF       0.97085     0.9810
GBPEUR       1.3680        1.3884
USDZAR      13.5995       13.8029
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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