A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.
*Financial markets.

12 October 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
FX: The special auction funds maintained at 196.00/197.50 as at Friday. Gross FX reserves on a 30 day moving average now at $30.226bn from $30.37 as at 30 Sept 2015.

FIXED INCOME: Last week closed on a bearish sentiment. Moves earlier last week in both bonds and bills had been pretty aggressive with securities starting to look pretty expensive. Money market liquidity increased because of FX refunds and now at the year high of N1.2 trillion. Bond yields lower by 100bps W-o-W to close at 13.86% while average bill yield closed at 9.81% (- 180bps). Bid/offer spreads in bonds back to normal 30kobo spread but patchy trading still evident in bill market with no OMO announcement. We expect a bearish bias at week open ahead of the monthly bond auction and possible liquidity outflow from balance of TSA implementation.

COMMODITIES: Oil extended gains near $50 a barrel amid speculation an increase in demand will ease a global glut.
Futures rose as much as 1% in New York after advancing 9% last week. Demand will grow and non-OPEC supply is due to contract, Abdalla Salem El-Badri, the secretary-general of the Organization of Petroleum Exporting Countries, said at a conference in Kuwait City on Sunday.

NIGERIA: Total value of stocks listed on the Nigerian Stock Exchange (NSE) fell by N3.255 trillion in twelve months, from September 30 2014 to October 8, 2015. This sharp decline in value of stocks on the exchange, also known as market capitalization, worsened last week, with investors losing N160 billion between Monday and Thursday.
Specifically, market capitalization fell by 23.9% from 13.61 trillion on September 30, 2014 to N10.26 trillion at the end of trading on Thursday, October 8, 2015. Another stock market indicator, the All Share Index (ASI) dropped by 26.9% from 41,210.10 basis points to 30123.20 points. Similarly, market capitalization fell from N10.512 trillion, Friday October 2 to N10.352 trillion at the end of Trading on Thursday, October 8.

U.K: U.K. stocks retreated, snapping an eight-day winning streak, with Rolls-Royce Holdings Plc and Standard Chartered Plc leading declines.
Rolls-Royce fell 3.4% after the Financial Times reported that European regulators have started a probe into whether airlines are being forced to enter anti-competitive service contracts with component manufacturers. Standard Chartered slid 1.7% after Investec Plc said that consensus estimates for revenue and earnings are too high. The FTSE 100 Index slipped 0.3% to 6,395.72 at 8:38 a.m. in London.

EU: Mario Draghi is reminding the world that the euro area has a trillion-euro comfort blanket. While some major central banks feel the chill of a global emerging-market slowdown over their plans to tighten policy, the European Central Bank president has at least 700 billion Euros ($795 billion) out of a slated 1.1 trillion Euros still to spend in his quantitative-easing program. ECB officials are quietly indicating they’ll let the current program take its course for now, while saying repeatedly that they’re ready to do even more if needed.
At the International Monetary Fund’s annual meeting in the Peruvian capital of Lima over the weekend, delegates see-sawed between gloom that economic woes from Beijing to Brazil would derail world output, and optimism that reality will undershoot the worst fears.

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     30.226

Money Market Highlights
O/N                                 01.2500
30 Days                           13.9333                                                                                                                            90 Days                          15.3364
180 Days                         16.7385

USD 1 Month                  0.1968
USD 2 Months               0.2501
USD 3 Months               0.3206
USD 6 Months               0.5282                                                                                                                      USD 12 Months            0.8447

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           07-Jan-16          10.19
182d         07-Apr-16         11.72
364d         01-Sep-16         13.05
2yr            27-Aug-17         13.55
3yr            29-Jun-18         13.64
5yr            13-Feb-20         13.61

Indicative Currency Exchange Rates
                         Bid          Offer
USDNG         197.00        199.50
EURUSD       1.1272         1.1474
GBPUSD       1.5247         1.5449
USDJPY        120.13         120.16
USDCHF       0.95605     0.9662
GBPEUR       1.3394        1.3598
USDZAR      13.1734       13.3768
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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