A Review of the Nigerian Energy Industry

Financial market products & services update

*Financial markets.

10 January 2018, Sweetcrude, Houston, Texas — The local and international financial market products and services update.
NIGERIA: The World Bank has forecast that economic growth in Nigeria would edge up to at least 2.5% in 2018, as the country benefits from improved commodity pr, ces, investments and trade. According to the World Bank’s January 2018 Global Economic Prospect report launched on Tuesday in Washington DC, Nigeria’s Gross Domestic Product (GDP) is expected to grow by 2.8% in 2019 and 2020. The News of Agency of Nigeria (NAN) reports that the World Bank also forecast that global economic growth will go up to 3.1% in the year. According to the bank, growth in Sub-Saharan Africa is projected to continue to rise to 3.2% in 2018 and to 3.5% in 2019, on the back of firming commodity prices and gradually strengthening domestic demand. However, the report showed that growth would remain below pre-crisis averages, partly reflecting a struggle in larger economies to boost private investment.

FX: we saw decent liquidity in the interbank market yesterday. Traded range on the day $/N 359 – 361. YTD circa $924m has been traded in the window. Results of Monday’s wholesale intervention were released yesterday, banks were directed to allocate at least 20% of successful bids to invisible transactions, 15% to bills for collections and 10% to the agricultural sector. CBN offer was $100m for tenor not exceeding 60-day.

FIXED INCOME: Overall tone was more constructive yesterday in the fixed income space. Buyers re-emerged across the bill curve and for bonds, demand was mostly on the long end.

Offshore activity still evident and mostly skewed to T-bills. There was no OMO auction yesterday.

E.U: As the European Central Bank enters 2018, the debate over its stimulus plans is being dominated by policy makers warning against keeping policy ultra-loose for too long.

With the euro-area economy expanding solidly after three years of negative interest rates and quantitative easing, hawks such as Bundesbank President Jens Weidmann have stepped up calls for a definite end-date to bond purchases. Even Executive Board member Benoit Coeure, a leading proponent of QE when the region faced deflation, now sees a “reasonable chance” the latest extension of the program to September will be the last

U.K: U.K. businesses are warning that more price increases are ahead, according to a survey by the British Chambers of Commerce.

The proportion of services firms expecting to raise prices in the next three months climbed to the highest since 2008 last quarter, the lobby group said in a report Wednesday — a percentage balance of 36%. Among manufacturers, that figure rose to 50%, from 35% previously.

U.K. inflation accelerated to the fastest in more than five years in November, fueled by the pound’s slide since Britain’s vote to leave the European Union.

COMMODITIES: Oil extended gains from the highest close in more than three years as U.S. industry data signaled crude stockpiles dropped an eighth week.

Futures climbed as much as 0.9% in New York after rising 2.5% the previous two sessions. Inventories fell by 11.2 million barrels last week, the American Petroleum Institute was said to report on Tuesday. If the draw is replicated in Energy Information Administration data Wednesday, it will be the biggest decline for this time of the year since 1999.

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 05, 2018,    39,158

Money Market Highlight

O/N                      18.0833
30 Day                 16.4623
90 Day                 17.5253
180 Day               18.8159
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     14.49
182d         12-Jul-18      15.31
364d         29-Nov-18    16.13
2y             13-Dec-19    13.53
3y             13-Dec-20    13.40
5y             27-Jan-22     13.42

Indicative Currency Exchange Rates
Bid        Offer

USDNGN (I&E)   359.00      360.00
EURUSD              1.1848      1.2048
GBPUSD              1.3415      1.3617
USDJPY               111.83       111.86
GBPEUR              1.1211      1.1415
USDZAR             12.2913    12.4945
EURNGN            430.03       431.39
GBPNGN            486.62       488.02

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