A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.
*Financial markets.

30 September 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Half the Nigeria’s bonds listed on the JPMorgan Government Bond Index for Emerging Markets will be removed today and the rest next month, the US bank said on Tuesday.
The decision, which means investments funds tracking the index will sell Nigerian bonds, according to Reuters, would add upward pressure to borrowing costs for Africa’s largest economy already reeling from a sharp drop in oil revenues.
JPMorgan said this month it would drop FGN Bonds from its index, citing a lack of liquidity and currency restrictions.
The bank said in a note 50% of bonds would be removed as of September 30, part of its month-end index rebalancing, cutting Nigeria’s weight to 0.79%. The weight of Brazil and South Africa will increase by 0.80% and 0.20% respectively.

FX: The CBN intervened at the special auction funds yesterday at 196.00/197.00.

FIXED INCOME: The OMO auction announcement yesterday brought a halt to the bull run seen in T-bills in the last seven sessions. In bonds, demand had softened from Monday and it puffed up yesterday. Profit taking was the order of the day and mostly from locals. A few offshore accounts making inquiries in small size but most of the activity yesterday was street driven. The same trend is expected today if the CB announces another OMO.

U.S.: Treasuries declined for the first time in three days as gains in Asian stocks curbed demand for the relative safety of government debt.
The benchmark 10-year yield rose with Federal Reserve Chair Janet Yellen and New York Fed President William C. Dudley scheduled to speak Wednesday after saying this month that they still expect to raise interest rates later in the year. Reports this week are projected to show that continued strength in the U.S. jobs markets has kept unemployment at a seven-year low. The Bloomberg U.S. Treasury Bond Index has climbed 1.1% in September, while the MSCI WorldIndex of shares is set for a second monthly drop, declining 5.4%.

COMMODITIES: Commodity markets roiled by turmoil from China to Greece must now brace for another shock as the U.S Federal Reserve prepares to hike rates. Returns from raw materials plunged to least since 1999 last month amid an oversupply in everything from copper to oil and forecasts for the slowest economic growth since 1990 in China.

EUROPE: European stocks advanced, rebounding from yesterday’s decline, as investors paused to assess value in what is heading for the worst quarter in four years.
Carmakers and commodity producers posted the biggest gains of the 19 industry groups on the Stoxx Europe 600 Index. Glencore Plc led miners with an advance of 7.4%, as metal prices rallied. PSA Peugeot Citroen paced auto-related stocks, rising 5.6%.
The Stoxx 600 jumped 1.8% to 345.21 at 8:22 a.m. in London. Shares slidon Tuesday, as concern over a slowdown in Asia and uncertainty over the Federal Reserve’s actions continued to weigh on investor sentiment and stoke volatility. The equity benchmark has fallen 9.5% in the third quarter, heading for its worst performance since 2011. It’s also poised for its first back-to-back monthly drop in more than a year.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   9.30%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     30.485

Money Market Highlights
O/N                                   5.7333
30 Days                           14.5852                                                                                                                            90 Days                          15.8238
180 Days                         17.0817

USD 1 Month                 0.1936
USD 2 Months               0.2591
USD 3 Months               0.3266
USD 6 Months               0.5331                                                                                                                      USD 12 Months             0.8548

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           24-Dec-15          11.21
182d         24-Mar-16         13.68
364d         01-Sep-16          14.08
2yr            27-Aug-17          14.71
3yr            29-Jun-18         14.60
5yr            13-Feb-20         14.73

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         196.00       199.50
EURUSD       1.1115         1.1318
GBPUSD       1.5038        1.5241
USDJPY        120.05        120.10
USDCHF       0.97045     0.9806
GBPEUR       1.3397        1.3601
USDZAR      13.7427       14.9460
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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