A Review of the Nigerian Energy Industry

Local and international financial market products & services update

*Financial markets.

02 July 2018, Sweetcrude, London — The local and international financial market products and services update.
NIGERIA: Britain and Nigeria are exploring ways to list naira-denominated bonds on the London Stock Exchange to help fund infrastructure projects in the West African country, the City of London’s Lord Mayor told Reuters. Charles Bowman, who acts as an ambassador for the British capital’s financial district, made the comments during a three-day visit to Nigeria during which he held talks with the vice president, trade minister and representatives of both Nigeria’s stock exchange and central bank. “We are looking at clever methods of essentially being able to list, by way of example naira-denominated bonds, but having those listed on the London Stock Exchange. Having local bonds with an access point into the London Stock Exchange,” said Bowman. Bowman, speaking to Reuters in an interview in Nigeria’s commercial capital Lagos, did not provide specific details of who had been involved in the talks, how advanced discussions were or when such a move could take place. “We have a lot of capital in London but we don’t have the projects to support. Nigeria has lots of projects to support and not the capital – you are reliant on the banking structure,” said Bowman

FX: The I&E window closed the week on a bid tone. Flows were reported at the bid/offer level of 361.00/362.50 levels. Friday’s turnover stood at $67.53m, raising the volume traded last week to $0.796bn. Average daily turnover currently stands at $159.10m, which is down compared to the previous week. The premium between the two fixes [NAFEX &NIFEX] is now N16.14.

FIXED INCOME: Bond market closed last week on a bearish tone as bits of selling led to aggressive re-pricing across the bond curve. Unfortunately, FAAC allocation didn’t get disbursed on Friday depriving the market of much-needed liquidity (currently c N 100bn).

The low liquidity led to an initial selloff in the bill market, but buyers emerged towards the end of the session taking yields lower.

There’ll be a T-bill PMA on Wednesday, on offer are 9.5bn 91-day, 33.9bn 182-day, and 127.1bn 364-day bill. We expect the stop rate to be around the previous level.

U.S: U.S. President Donald Trump’s assertion that trade wars are “good, and easy to win” is fake news if economists are to be believed.

The victor in an economic war of attrition will instead be which nation loses least. The first salvos are set to be launched this week as America and China prepare to slap duties on each other, risking a spiral of tit-for-tat tariffs that imperils global growth.

COMMODITIES: Crude slid from the highest level in more than three years after U.S. President Donald Trump piled pressure on Saudi Arabia to increase output to cut the cost of oil for consumers.

Futures in New York dropped as much as 2.2% after a 1% gain Friday. Trump tweeted on Saturday that Saudi King Salman bin Abdulaziz agreed to effectively boost oil production to the kingdom’s maximum capacity in response to turmoil in Iran and Venezuela. While the White House backed off his assertion that evening, Trump demanded in a TV interview aired Sunday that OPEC stop what he called its manipulation of the crude market and insisted the group pump more.

Macro Economic Indicators
Inflation rate (Y-o-Y) for May 2018             11.61%
Monetary Policy Rate current                       14.00%
FX Reserves (Moving Avg Bn $) as at June 13, 2018,     47,627

Money Market Highlights
O/N                        14.7000
30 Day                   14.4552
90 Day                   15.0004
180 Day                 16.2766
USD 1 Month         2.09025
USD 2 Months       2.16913
USD 3 Months       2.33575
USD 6 Months       2.50125
USD 12 Months     1.72400

Benchmark Yields
Tenor      Maturity      Yield (%)
91d          04-Oct-18     12.79
182d        27-Dec-18     13.07
364d        04-Apr-19     13.90
2y            13-Feb-20     12.33
3y            15-Jul-21      13.30
5y            27-Jan-22     13.66

Indicative Currency Exchange Rates
                                    Bid        Offer
USDNGN (I&E)      360.00      362.00
EURUSD                 1.1538      1.1760
GBPUSD                 1.3063      1.3286
USDJPY                  110.66      110.95
GBPEUR                 1.1211      1.1420
USDZAR                13.7419     13.9470
EURNGN                419.92       421.50
GBPNGN                474.50       477.58

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