A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.
*Financial markets.

07 October 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: President Muhammadu Buhari has called on Britain, Switzerland and other countries to speed up the processes of investigation, prosecution and repatriation of Nigerian funds stolen by corrupt public officials and their accomplices. The president however applauded the renewed support from Britain and Switzerland for the recovery and repatriation of public funds stolen from Nigeria.
At separate audiences with the new British and Swiss Ambassadors, who were at the Presidential Villa to present their letters of credence, Buhari noted that British, Swiss and other foreign anti-crime agencies had already given his administration much help with relevant information and intelligence on public funds that were stolen and illegally transferred to personal bank accounts by officials of past administrations.

FX: The special auction funds maintained at 196.00/197.50 yesterday. Gross FX reserves on a 30 day moving average now at $30.252bn from $30.37 as at 30 Sept 2015.

FIXED INCOME: Bullish reaction in the T-bill space yesterday which was supported by the system liquidity (This was on the account of FX refund and expected CRR credit). Quotes on short dated benchmark bills and April 2017s widened for most of the day. Those papers have now become illiquid due to the excess demand. Demand equally filtering into the Aug 2016s.
T-Bill auction today and we expect a subdued session in T-bill secondary trading as most of the interest will be at the auction.

CHINA: China’s foreign exchange reserves fell $43 billion in September as the central bank sold dollars to defend the Yuan. A smaller-than-expected drop eases fears about extreme selling pressure on the currency. In the medium term, the People’s Bank of China won’t spill treasure to defend an exchange rate that is choking exports. In the short term, recent commitments to Yuan stability from President Xi Jinping down suggest they will do so for a while longer.
FX reserves came in at $3.514 trillion in September, down from $3.557 trillion in August and above expectations of a $3.500 trillion reading. A drop of $43 billion compares with Augusts’ $94 billion fall, easing fears of an accelerating exodus of funds.

ASIA: The Bank of Japan made no change to monetary policy at its meeting today. As predicted by almost all analysts, the 80 trillion yen ($667 billion) stimulus was left in place. With the BOJ buffeted by conflicting economic and political forces, our baseline scenario is that they will ease again at their January 2016 meeting. Making a call on the right direction for the BOJ is increasingly tough to do. Weak exports, stagnant consumption and fading production argue for more stimulus.

COMMODITIES: Copper climbed to a two-week high as speculation that the Federal Reserve will keep U.S. interest rates near zero for longer boosted the appeal of riskier assets such as commodities, and investors weighed the impact of supply cuts on the global market. The metal for delivery in three months rose as much as 1% to $5,234 a metric ton, the highest price since Sept. 22, and traded at $5,226 on the London Metal Exchange at 2:36 p.m. in Hong Kong. It gained 1.8% over the previous three days, and a further rise on Wednesday would be the longest run of gains since Sept. 10.

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     30.252

Money Market Highlights
O/N                                   2.8283
30 Days                           14.4146                                                                                                                            90 Days                          15.4522
180 Days                         16.8892

USD 1 Month                0.1937
USD 2 Months               0.2565
USD 3 Months               0.3232
USD 6 Months               0.5232                                                                                                                      USD 12 Months             0.8306

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           07-Jan-16          09.75
182d         07-Apr-16         12.59
364d         01-Sep-16          13.45
2yr            27-Aug-17          14.04
3yr            29-Jun-18         14.16
5yr            13-Feb-20         14.34

Indicative Currency Exchange Rates
                         Bid          Offer
USDNG         197.00        199.50
EURUSD       1.1130        1.1332
GBPUSD       1.5172         1.5374
USDJPY        120.06        120.09
USDCHF       0.96325     0.9734
GBPEUR       1.3497        1.3701
USDZAR      13.3798       13.5832
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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