A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial market update.
*Financial market update.

13 October 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
FX: The special auction fund maintained at 195.98/196.98 yesterday. Gross FX reserves on a 30 day moving average now at $30.215bn from $30.37 as at 30 Sept 2015.

FIXED INCOME: It was mostly a quiet session in bonds yesterday. The bond market had started off bearish but then rebounded to close at 13.92% (marginal +5ps). The recent supply of July 2034s (from the state loans for government bond switch) is making this paper the outlier (closed 14.81% with rest of the curve on 13% handle). Liquidity gradually returning to both bond and T-bill markets. We saw a full reversion to standard bid/offer spreads in bonds but a partial reversion in bills (still patchy trading in short dated bills).

COMMODITIES: Oil halted its decline after falling the most in six weeks as signs of rising demand in China countered an increase in OPEC production.
Futures climbed as much as 1.3% in New York after Monday’s 5.1% drop. China’s crude purchases rebounded in September from a three-month low even as total imports extended a slump. Global oil consumption is expanding while non-OPEC nations will supply less, according to Abdalla Salem El-Badri, the secretary-general of the Organization of Petroleum Exporting Countries.

NIGERIA: Nigeria may curb the supply of natural gas to Ghana because the country hasn’t paid more than a year of bills for the fuel, the West African Gas Pipeline Corporation said.
Ghana stopped paying for the fuel from Africa’s largest economy in August of 2014, Harriet Wereko-Brobby, spokeswoman for the pipeline company, told Bloomberg.
The Nigerian Gas Company sent a letter to Ghana’s largest power producer, the Volta River Authority, announcing the possible cut in supply, she said.
“It’s always possible to have the curtailment at any moment,” she said.
Ghana and Nigeria lowered their economic growth forecasts this year because of a drop in oil prices that reduced revenue and made it harder to meet budget deficit targets.

U.K: Britain’s inflation rate turned negative for only the second time since 1960 in September, reflecting a weak price backdrop that the Bank of England has warned will persist into 2016.
Consumer prices fell an annual 0.1% after stagnating in August, the Office for National Statistics said in London Tuesday. Economists had forecast stagnation. Prices last declined in April, which was the first sub-zero reading since 1960.
The figures will reinforce the view that the BOE is still months away from raising its benchmark interest rate from a record-low 0.5%. While the economy is growing and the labor market tightening, inflation remains far below the bank’s 2% target and officials are wary of the potential impact of the global slowdown.

CHINA: China’s imports extended the longest losing streak in six years, underscoring the headwinds to global growth from a rebalancing in the world’s second-largest economy. Asian shares, copper, the Yuan and the Australian dollar weakened. Imports plunged 17.7% in Yuan terms in September from a year earlier, widening from a 14.3% decrease in August and an 11th straight decline. Exports fell 1.1% in September in Yuan terms, the customs administration said Tuesday, compared with a 6.1% drop in August. The trade surplus was 376.2 billion Yuan ($59.4 billion).

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     30.215

Money Market Highlights
O/N                                 01.3333
30 Days                           13.4929                                                                                                                            90 Days                          15.2898
180 Days                         16.8113

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           14-Jan-16          10.21
182d         14-Apr-16         11.61
364d         06-Oct-16         12.68
2yr            31-Aug-17         13.67
3yr            30-May-18        13.73
5yr            13-Feb-20         13.63

Indicative Currency Exchange Rates
                         Bid          Offer
USDNG         197.00        199.50
EURUSD       1.1307         1.1509
GBPUSD       1.5200         1.5402
USDJPY        119.64         119.67
USDCHF       0.95305     0.9632
GBPEUR       1.3312        1.3516
USDZAR      13.3511       13.5545
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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