A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.

09 January 2018, Sweetcrude, Houston, Texas — The local and international financial market products and services update.
NIGERIA: Nigeria’s foreign reserves reached $40.4 billion as of Jan. 5, an increase of roughly $1 billion from December, the central bank said on Monday. Successful debt sales, including multiple Eurobond offerings last year, have helped the government accrue billions of dollars in foreign reserves, although they remain far from the peak of $64 billion in August 2008. In its statement on Monday, Nigeria’s central bank also said it had injected $210 million into the interbank foreign exchange market on Monday, extending efforts to increase liquidity and alleviate dollar shortages. The bank said the rise reflected its “strategy to effectively manage forex demand by various sectors of the economy”, stressing restrictions on access to foreign currencies for importers of certain items. The central bank said its policies “had ensured a decline in Nigeria’s import bills from over $5 billion monthly in 2015 to about $1.5 billion in 2017”.

FX: The I&E window was well offered on the yesterday, with levels seen in the market between $/N 359 – 362. Last week’s turnover stood at $500m with the high traded at $/N 363. Liquidity was supported by a continuous appetite of offshore investors into fixed income securities. Local buyers seem to be comfortable at 359.50-360.00.

FIXED INCOME: Strain on money market liquidity (estimated to be short cN100bn) changed the tone to start the week. Bonds and bills saw sellers, though the daily 5bp drop at the OMO auction continued.

There has been no resistance from street to present new bids at the OMOs at previous day’s stop rate.Money market expected to remain tight till Thursday when maturing OMO bills will provide support.

E.U: German industrial production rebounded in November, setting up the euro area’s biggest economy for a strong finish to the year and adding to the picture of robust growth in the currency bloc.

Led by demand for investment goods, output increased 3.4% from the previous month, data from the Economy Ministry showed on Tuesday. Production surged 5.6% from a year earlier, the most since 2011.

Germany is undergoing an economic boom amid the broadest euro-zone expansion in almost two decades and strengthening global demand. With record-low unemployment, the country could be a bellwether for the European Central policymakers as policymakers try to judge when inflationary pressures will warrant unwinding their crisis-era measures for the 19-nation currency bloc.

U.K: U.K. Prime Minister Theresa May’s attempt to give her government a 2018 reboot was marred by a chaotic cabinet reshuffle as senior ministers refused to follow her orders. It’s a development that bodes ill for her ability to successfully navigate the next, even trickier stage of Brexit talks.

COMMODITIES: Oil extended gains above $62 a barrel before U.S. government data forecast to show crude stockpiles declined for an eight week and as political tensions simmer in Iran, OPEC’s third-biggest producer.

Futures added as much as 1.3% in New York to the highest intraday level in more than three years. U.S. inventories probably fell by 3.75 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Iran’s President Hassan Rouhani said Monday the anger that led to a week of anti-government protests exposed the need for the freedoms he has championed, as well as a stronger economy.

Macro Economic Indicators
Inflation rate (Y-o-Y) for November 2017,                          15.91%
Monetary Policy Rate current                                               14.00%
FX Reserves (Moving Avg Bn $) as at January 04, 2018,    39,074

Money Market Highlights

O/N                        19.2500
30 Day                   16.5538
90 Day                   17.3949
180 Day                 18.5820
USD 1 Month        1.55250
USD 2 Months      1.62194
USD 3 Months      1.70393
USD 6 Months      1.86507
USD 12 Months    1.72400

Benchmark Yields
Tenor      Maturity      Yield (%)

91d          12-Apr-18     13.90
182d        12-Jul-18      15.36
364d        29-Nov-18    16.14
2y            13-Dec-19    13.76
3y            13-Dec-20    13.58
5y            27-Jan-22     13.43

Indicative Currency Exchange Rates
Bid      Offer

USDNGN (I&E)     359.00    360.00
EURUSD                1.1836    1.2038
GBPUSD                1.3430    1.3631
USDJPY                 112.87    112.89
GBPEUR                1.1232    1.1437
USDZAR                12.3377  12.5401
EURNGN               429.70    431.06
GBPNGN               487.06    488.45

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