A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.

13 December 2017, Sweetcrude, Lagos — The local and international financial market products and services update.

NIGERIA: The Debt Management Office, DMO, yesterday commenced the process of refinancing domestic debt with proceeds of $500 million Eurobond as it announced its intention to repay in full the N198 billion treasury bills (TBs) scheduled to mature this month.
The DMO disclosed this in a statement yesterday, adding: “The N198.032 billion comprises of N131.415 billion and N66.617 billion of NTBs which will mature on December 14, 2017, and December 21, 2017, respectively.”
Before now, the practice has been to rollover NTBs at maturity. The DMO also stated: “It will be recalled that the Government had announced plans to refinance some maturing domestic debt with external borrowing as part of its overall debt management strategy of reducing Debt Service Costs. Other objectives of this strategy are to free up space in the domestic market for other borrowers and achieve a more sustainable debt portfolio mix of 60% Domestic and 40% External.

FX: The tone in the I&E was bid yesterday following the strong move downward experienced in the fixed income. We saw the local currency trading in the tight range of $/N 360 – 361.50. If the sell-offs in the fixed income persist, we may see naira printing fresh high above $/N 362 levels.

FIXED INCOME: Select maturities traded in single digits yesterday. Whispers that maturing T-bills in the rest of Dec would be repaid ignited this.
Official confirmation from the CBN has now also cast doubt on the possibility of stabilization securities being issued against Thursday’s maturities.
However, profit taking emerged across the T-bill curve from offshore accounts but was muted in bonds. The focus will be on today’s bond auction where recent activity is expected to feed strong bids.

U.K: Prime Minister Theresa May’s control of the Brexit process will undergo its stiffest parliamentary test yet on Wednesday when she faces a showdown with rebels in her own party over the laws that will take Britain out of the European Union.
May’s government is trying to pass a bill through parliament that will repeal the 1972 legislation binding Britain to the EU and copy existing EU law into domestic law to ensure legal continuity after ‘Exit Day’ on March 29, 2019.

U.S: As investors await 2018 direction from Federal Reserve chairman nominee Jerome Powell, they will get one last chance to hear Janet Yellen’s take on the U.S. economy.
If all goes as expected, she will use her final scheduled press conference before stepping down at the helm of the U.S. central bank to explain why officials raised rates a third time this year.
The rate-setting Federal Open Market Committee is expected to lift the target range for the benchmark federal funds rate by a quarter percentage point to 1.25% to 1.5% at the conclusion of its two-day meeting in Washington on Wednesday. A policy statement will be released at 2 p.m. and her press conference begins 30 minutes later.

COMMODITIES: OPEC is near its goal of rebalancing the oil market as an inventory overhang targeted by its output curbs continue to shrink, according to the group’s secretary general.
The stockpile glut — including crude as well as oil products — has shrunk to 130 million barrels above the five-year average, Mohammad Barkindo said in a Bloomberg Television interview in Beijing before the release of OPEC’s monthly market report on Wednesday.

Macro Economic Indicators
Inflation rate (Y-o-Y) for October 2017             15.91%
Monetary Policy Rate current                             14.00%
FX Reserves (Bn $) as at December 11, 2017,   36.434

Money Market Highlights

O/N                           3.0714
30 Day                     16.4948
90 Day                     17.5427
180 Day                   18.7585
USD 1 Month           1.44438
USD 2 Months          1.48849
USD 3 Months          1.54878
USD 6 Months          1.72988
USD 12 Months        1.72400

Benchmark yields
Tenor      Maturity      Yield (%)

91d         15-Mar-18      11.11
182d       14-Jun-18       15.17
364d       29-Nov-18      17.74
2y           15-Nov-19      14.80
3y           15-Nov-20      14.53
5y           27-Jan-22        14.35

Indicative Currency Exchange Rates
Bid          Offer

USDNGN (I&E)    358.00        359.00
EURUSD               1.1649        1.1851
GBPUSD              1.3247         1.3449
USDJPY               113.38         113.41
GBPEUR              1.1258        1.1461
USDZAR             13.5373      13.7668
EURNGN             423.35         424.71
GBPNGN             479.79        481.19

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