A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.

02 January 2018, Sweetcrude, Houston — The local and international financial market products and services update.
NIGERIA: The Lagos Chamber of Commerce and Industry, LCCI, has projected the country’s GDP growth to rise by three percent in 2018, given the prevailing economic fundamentals and government commitment to sustain economic reforms.

The Chamber made this projection in a statement signed by the Director General of LCCI, Mr. Muda Yusuf in a statement. He said: “The chamber also projects oil price to average around $50 per barrel; External reserve to hit $40 billion mark; and headline inflation at 13%.

FX: Last week turnover [exclusive of today in the I&E is at $405.75m and Friday range stood at $/NGN 320.00 – 362.00. There is not much activity last week as most corporate and Investor wound down for the year.

FIXED INCOME: A quick re-cap of the Nigeria rates shows 1yr yield start at 22% and closing at 17%; average bond yields at 14% vs. 16%.

Actions/activities surrounding OMO auctions mostly drove the shape of the yield curve last year and will still remain the key factor.

Recent trend at the OMOs still gives room for further compression this year 2018. The new year will start with a bill auction tomorrow, Wednesday (Jan 3).

U.K: U.K. manufacturing growth slowed more than forecast in December, retreating from a four-year high.

IHS Markit’s Purchasing Managers Index for the industry slid to 56.3, below the median estimate of economists for a reading of 57.9. Still, that pace of expansion left the quarterly average at the highest since 2014.

“Expansion remained comfortably above long-term trend rates,” said Rob Dobson, Director at IHS Markit. “The sector has therefore broadly maintained its solid boost to broader economic expansion in the fourth quarter. The outlook is also reasonably bright.”

CHINA: China will continue to fully, accurately and strictly implement United Nations’ sanctions on North Korea in accordance with Chinese laws, the commerce ministry said on Tuesday.

The latest U.N. sanctions limit a country’s refined oil products exports to North Korea at no more than 500,000 barrels per year starting Jan 1, 2018, the ministry told Reuters in an faxed statement.

China exported no oil products to North Korea in November, Chinese Customs data showed, apparently going above and beyond sanctions imposed earlier last year by the United Nations in a bid to limit petroleum shipments to the isolated country.

COMMODITIES: After capping its second annual gain, oil started 2018 by advancing toward $61 as U.S. drilling activity remained at a standstill following a slip in production and as protests continued in Iran.

Futures climbed 0.4% in New York after a 3.3% increase last week. U.S. drillers targeting crude kept the rig count unchanged for a second week at 747, Baker Hughes said Friday. The death toll during the unrest in Iran, OPEC’s third-largest producer, rose as security forces clashed with demonstrators rallying in a rare show of displeasure with the country’s leaders.

Macro Economic Indicators
Inflation rate (Y-o-Y) for November 2017            15.91%
Monetary Policy Rate current                                14.00%
FX Reserves (Bn $) as at December 28, 2017,      38.730

Money Market Highlights
NIBOR (%)

O/N                           5.000
30 Day                    13.5149
90 Day                    15.3907
180 Day                  17.1875
LIBOR (%)
USD 1 Month          1.56375
USD 2 Months        1.61674
USD 3 Months        1.68577
USD 6 Months        1.83363

Benchmark Yields
Tenor        Maturity        Yield (%)

91d            29-Mar-18      11.29
182d          29-Jun-18       15.12
364d          29-Nov-18      17.60
2y              15-Nov-19      14.21
3y              15-Nov-20      14.08
5y              27-Jan-22        14.03

Indicative Currency Exchange Rates
Bid        Offer

USDNGN (I&E)    358.00      359.00
EURUSD               1.1974      1.2176
GBPUSD               1.3448      1.3650
USDJPY                112.16      112.19
GBPEUR               1.1118      1.1323
USDZAR               12.2115    12.4149
EURNGN              433.51      434.90
GBPNGN              486.42      487.82

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