A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets
Financial markets

28 September 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Nigerian National Petroleum Corporation (NNPC) says it may sell refineries that fail to work optimally by the expiration of the 90-day ultimatum for their rehabilitation.
Dr Ibe Kachikwu, the NNPC Group Managing Director, disclosed this at an interactive session with news men in Lagos. Kachikwu said “by the end of December when the 90-day ultimatum will expire, any refinery that does not work optimally will be sold.
“If by December, the refineries don’t work, I will export crude allocation and import refined petroleum products until we fix the refineries. Right now, the Port Harcourt refinery is showing signs that it will meet the December deadline.

FX: Post MPC and no significant change in the market as the two way quote FX market remains shut. The special auction funds still maintained at 196.00/197.00.

FIXED INCOME: Post MPC reaction has seen local bids supported both bonds and bills as at Wednesday, last trading day for last week.
T- Bill auction prints at 10.78% (-), 14.12% (-34bps) and 16% (- 124bps) yield on 91, 182 and 364day respectively. Total of N100.88bn was sold. 182day and 364day coming in lower because of the expected cash from CRR cut. We expect the strong tone to continue into next week.

EUROPE: The optimism that sent European stocks rallying on Friday was short-lived.
The Stoxx Europe 600 Index lost 0.3 percent at 8:13 a.m. in London. Growth concerns resurfaced after Chinese industrial companies reported profits fell the most in at least four years. Automakers, which had their worst week since 2011, fell further.
Bullishness had swept through European markets on Friday, with the Stoxx 600 rallying 2.8 percent, the most in almost a month, after comments by Federal Reserve Chair Janet Yellen signaled recent market turmoil won’t derail the U.S. recovery. Yet the gains weren’t enough to erase a second consecutive weekly decline. Europe’s benchmark measure fell 16 percent from this year’s record in April through Friday and reached an eight-month low on Thursday.

INDIA: Indian sovereign bonds rose, pushing the 10-year yield to a one-week low amid optimism the central bank will cut interest rates at its policy meeting on Tuesday.
The Reserve Bank of India will reduce the repurchase rate 25 basis points to 7 percent, according to 40 of 49 economists surveyed by Bloomberg. One sees a cut to 6.75 percent while eight see no change. RBI Governor Raghuram Rajan has lowered benchmark borrowing costs three times this year as a slump in Brent crude prices helped slow inflation in the net oil-importing nation. The rupee rose for the first time in five days.

COMMODITIES: Oil halted its advance near $45 a barrel as lower Chinese industrial profits signaled demand may be weakening in the world’s second-biggest consumer.
West Texas Intermediate futures fell as much as 1.3% after climbing 2.3% last week. China’s industrial-company profits dropped 8.8% in August, the most in at least four years, while measures of its factory output and U.S. non-farm
payrolls data are due later this week.

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     30.517

Money Market Highlights
O/N                                  14.1250
30 Days                           15.7567                                                                                                                            90 Days                          16.9066
180 Days                         18.0573

USD 1 Month                 0.1943
USD 2 Months               0.2598
USD 3 Months               0.3261
USD 6 Months               0.5363                                                                                                                      USD 12 Months             0.8088

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           24-Dec-15          11.84
182d         24-Mar-16         14.12
364d         01-Sep-16          14.69
2yr            31-Apr-17          14.80
3yr            30-May-18        14.81
5yr            13-Feb-20         14.84

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         196.00        199.50
EURUSD       1.1088        1.1290
GBPUSD       1.5129         1.5331
USDJPY        120.15         120.18
USDCHF       0.97365     0.9838
GBPEUR       1.3510        1.3714
USDZAR      13.7918       13.9952
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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