A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.
*Financial markets.

05 November 2015, Sweetcrude, Lagos – Local and international financial products and services update.
NIGERIA: The federal government has approved the payment of N413 billion to oil marketers being the outstanding payments for subsidy claims.
The approval is coming on the heels of a brewing fuel supply crisis over non-payment of the subsidy claims, leading to queues in petrol filling stations in some major cities.
A statement by the Nigerian National Petroleum Corporation (NNPC) announcing the approval on Wednesday said the payment would be ‘immediate’.
NNPC noted in the statement from its Group General Manager, Public Affairs Division, Ohi Alegbe, that the corporation had also stepped up measures to eliminate the noticeable fuel queues in some petrol stations across some major cities in the country with the supply of additional volumes of petrol.

FIXED INCOME: The recent secondary market developments reflected at yesterday’s T-bill auction. With the relatively small size to be offered at the bond auction, it was no surprise that yields would go further south across board.
Every bond/T-bill price is higher. Biggest movers in bonds are the April 2017s which continues to track the T-bill market closely. Average yield in bills now 5.21% (-100bps from yesterday). We expect sustained demand as the market remains relatively liquid and supportive of demand.

FX: The CBN quoted the special auction rate at 196.98 yesterday. Gross FX reserves on a 30 day moving average now at $30.250bn (1st Nov 2015) from $30.192 as at 30 Oct 2015.

COMMODITIES: Oil traded below $48 a barrel before U.S. government data forecast to show crude stockpiles increased in the world’s biggest consumer.
Futures fell as much as 0.6% in New York after advancing 3.8% Tuesday. Inventories probably expanded for a sixth week, keeping supplies more than 100 million barrels higher than the five-year seasonal average, a Bloomberg survey shows before an Energy Information Administration report Wednesday. China has a bottom-line goal of 6.5% annual economic growth, according to its new development blueprint released Tuesday.

CHINA: The Shanghai Composite Index entered a bull market as government support underpinned the rebound from China’s $5 trillion stock rout. Emerging-market currencies slipped against the dollar and Australian bonds dropped as Federal Reserve Chair Janet Yellen signaled a possible interest rates increase next month.
The Shanghai gauge closed more than 20% above its Aug. 26 low, meeting some investors’ definition of a bull market. European equity-index futures climbed. Russia’s ruble and Malaysia’s ringgit led declines as the Bloomberg Dollar Spot Index held near its highest level since March. Australian 10-year yields rose for a sixth day Thursday, tracking global bond losses.

U.S Federal Reserve Chair Janet Yellen and New York Fed President William Dudley both said the central bank could boost interest rates as soon as next month, while Fed Vice Chairman Stanley Fischer voiced confidence that inflation isn’t too far below the central bank’s goal.
“At this point, I see the U.S. economy as performing well,” Yellen said on Wednesday in testimony before the House Financial Services Committee in Washington. If economic data continue to point to growth and firmer prices, a December rate hike would be a “live possibility,” she said.
The Federal Open Market Committee said in its October statement that it will consider raising rates at its “next meeting,” citing “solid” rates of household spending and business investment.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   9.40%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     30.250

Money Market Highlights
O/N                                 01.0683
30 Days                          13.0328                                                                                       90 Days                          15.1169
180 Days                        16.6850

USD 1 Month                  0.1920
USD 2 Months                0.2557
USD 3 Months                0.3336
USD 6 Months                0.5574                                                                                       USD 12 Months              0.8824

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           04-Feb-16          03.65
182d         05-Apr-16         07.49
364d         20-Oct-16         08.90
2yr            31-Aug-17         10.54
3yr            30-May-18        11.13
5yr            13-Feb-20         12.07

Indicative Currency Exchange Rates
                         Bid           Offer
USDNG         197.50         199.50
EURUSD       1.0753         1.0955
GBPUSD       1.5286         1.5487
USDJPY        121.72           121.76
USDCHF       0.99155      0.0014
GBPEUR       1.4066         1.4270
USDZAR      13.8662        14.0696
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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