A Review of the Nigerian Energy Industry

Local & international financial market products/services update

*Financial markets.

03 July 2018, Sweetcrude, Lagos — The local and international financial market products and services update.
NIGERIA: Nigeria Mortgage Refinance Company (NMRC) plans to seek approval from members by the end of the month to triple the size of its debt programme to 440 billion naira ($1.44 billion), the state-backed mortgage agency said on Monday. Nigeria set up a mortgage-backed guarantee company in 2014, partly with World Bank aid, in an effort to boost lending through the creation of a secondary housing market, which is virtually non-existent in Africa’s most populous nation. NMRC said the notes could be issued through non-convertible loans and bonds, either through a public offering, private placement or a book-building process, it said in a notice to members.

FX: Another lacklustre start to the week in the interbank market. The market opened very bid as was the case most of the previous month. No firm offers in the interbank market, bid levels shown were $/N 361.00. Yesterday turnover at $198.30mio seems to buttress the tightness in the FCY liquidity.

FIXED INCOME: Bond trading remained subdued at the start of the third quarter, yields pulled further away due to lingering bearish sentiment.

T-Bills opened well bid and most of the interest was on the short-dated bills. August and September bills dropped an average of 20bps.

Money market liquidity was sub-optimal (176bn), CB did not announce OMO yesterday. There’s a 174bn OMO maturity later in the week to support the market.

U.K: U.K. companies are at “breaking point” over the lack of clarity on Brexit, and are slowing down their investments as they await answers to key questions surrounding Britain’s departure from the European Union, one of the country’s main business lobby groups said.

Business confidence and investment intentions will continue to deteriorate until Prime Minister Theresa May ends the bickering in her Cabinet and delivers “urgent clarity on the practical, detailed issues that underpin trade,” the British Chambers of Commerce said. The government has made “limited progress” on just two of 23 issues where business seeks clarity, ranging from mobile-phone roaming arrangements to customs and tariffs, it said.

CHINA: China will keep the currency stable at an equilibrium level, and the central bank will maintain a prudent, neutral policy stance, according to People’s Bank of China Governor Yi Gang.

Using standard language to describe the stance on the currency, Yi said the central bank will “keep the Yuan exchange rate basically stable at reasonable and balanced level.” That and comments by another PBOC official earlier on Tuesday are the first clear statement on the currency by the central bank since the Yuan started weakening in mid-June.

COMMODITIES: Oil rose above $74 a barrel on signs that a surge in supply by Saudi Arabia was only enough to maintain OPEC production last month.

Futures in New York climbed as much as 1.2% to touch its highest intraday level since November 2014. While Saudi Arabia raised crude supply by the most in five years in June, disruptions in Libya coupled with ongoing losses in Venezuela meant the kingdom’s boost was only enough to steady the group’s total output. Meanwhile, the premium for near-term U.S. oil increased to the highest since 2014 versus longer-dated contracts as analysts forecast shrinking supplies across America.

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
NIBOR (%)

O/N                       33.5500
30 Day                  14.3660
90 Day                  15.3844
180 Day                16.2695
LIBOR (%)
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       12.44
182d          03-Jan-18       12.95
364d          04-Apr-19      13.69
2y              13-Feb-20       13.35
3y              15-Jul-21        13.29
5y              27-Jan-22       13.66

Indicative Currency Exchange Rates
Bid       Offer

USDNGN (I&E)    360.00    362.00
EURUSD               1.1562    1.1765
GBPUSD               1.3070    1.3271
USDJPY                106.54    106.57
GBPEUR               1.1190    1.1395
USDZAR              13.6526  13.8536
EURNGN               420.87    422.31
GBPNGN               475.00    477.50

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