A Review of the Nigerian Energy Industry

Local & international financial market products & services update

*Financial markets.

11 June 2018, Sweetcrude, Lagos — The local and international financial market products and services update. NIGERIA: Nigeria expects to raise 400 billion Naira ($1.3 bln) via asset sales this year, part of which would help finance its record 2018 budget, the head of the privatisation agency said. Alex Okoh, director general of the Bureau of Public Enterprises, said the government has finalised plans to start a post-privatisation program for its power sector with a $1 billion credit from the World Bank to boost power distribution and transmission which has underperformed. Okoh told Reuters last week that the government has a list of 11 assets it plans this year either to sell to strategic investors or offer to private companies to lease and run on concession, ranging from power assets to sports stadiums. Sources have also said the government plans to sell part of its stake in Nigerian Reinsurance company through an IPO in November

FX: As at Friday, the daily average turnover for the week in the I&E window stood at $291.36m (excluding Friday’s figure) 16% down from the same period previous week. Closing levels in the I&E window was between $/N 361 – 362. The CBN announced the fortnightly retail FX auction and results are expected by Friday. CBN released the regulations for transactions with authorised dealers in Renminbi. Naira in the parallel market marginally gained 1 big figure with offers for the firm at N362.

FIXED INCOME: It was a very tough close to the week in the fixed income market especially for bonds. Sustained selling from both local and offshore accounts has kept yields high in the mid to high 13% level. Demand for t-bills, however, have been well supported because of decent money market liquidity. There’ll be PMA this week, on offer are 6bn 91- day, 50bn 182-day and 124bn 364day bills. We expect the stop rate of the 364-day to be much higher than the previous 11% discount because amount on offer is significantly more

UK: European stocks rose with most Asian shares as investors braced themselves for one of the busiest weeks of the year, during which three of the world’s major central banks will set interest rates, President Donald Trump will meet North Korea’s leader and Brexit will return to the fore

U.S: President Donald Trump is about to see whether his bet on North Korea will pay off: that Kim Jong Un’s desire to end his country’s economic strangulation and pariah status will prevail over the dictator’s fear of relinquishing his nuclear threat. Trump and Kim have yet to agree even on how to define denuclearization of the Korean peninsula — the stated goal of the meeting. The president wants the complete, verifiable and irreversible dismantling of his nuclear weapons program. North Korea is seeking a security guarantee — possibly including a peace treaty formally ending the Korean War — and the removal of the U.S.’s nuclear umbrella protecting allies South Korea and Japan

COMMODITIES: Oil has fallen to near the lowest level in two months after Saudi Arabia and Russia signalled they are ready to restore production in the second half of this year to offset potential supply disruptions in Iran and Venezuela. The latest sign of Russia’s willingness to relax caps is in contrast with some fellow producers including Iran, Venezuela and Iraq, which have signalled they are against restoring output ahead of the group’s key meeting in Vienna later this month. Brent futures for August settlement slumped 44 cents to $76.02 on the London-based ICE Futures Europe exchange. The contract dropped 0.4 percent last week. The global benchmark traded at a $10.62 premium to WTI for August.

Macro Economic Indicators
Inflation rate (Y-o-Y) for April 2017             12.48%
Monetary Policy Rate current                        14.00%
FX Reserves (Moving Avg Bn $) as at June 7, 2018,    47,425

Money Market Highlights

O/N                         5.7143
30 Day                  13.5397
90 Day                  13.9530
180 Day                14.8481
USD 1 Month         2.04617
USD 2 Months       2.13489
USD 3 Months       2.32631
USD 6 Months       2.48875
USD 12 Months     1.72400

Benchmark Yields
Tenor       Maturity        Yield (%)

91d           06-Sep-18       12.48
182d         06-Dec-18       13.41
364d         04-Apr-19       14.08
2y             13-Feb-20       12.95
3y             15-Jul-21        13.59
5y             27-Jan-22       13.62

Indicative Currency Exchange Rates
                                   Bid         Offer
USDNGN (I&E)    360.00      362.00
EURUSD               1.1706      1.1908
GBPUSD               1.3326      1.3528
USDJPY                109.97      110.00
GBPEUR               1.1270      1.1474
USDZAR               12.9410    13.1444
EURNGN              425.59      426.96
GBPNGN              484.07      485.47

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