A Review of the Nigerian Energy Industry

Financial market update

finance13 December 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria has sold 75 Billion naira in bonds with maturities of 3 or 20 years at higher yields than at a previous auction in November, the debt management office (DMO) said yesterday. The DMO sold 40 billion naira in 3year notes maturing in August 2016 at 12.90% at an auction on Wednesday, up from 12.55% at the previous auction. Total subscription stood at 133.39 billion naira at the November auction. All debt notes were re-openings of previous issues.

BONDS: Yields moves a tad higher on the back of high cut-off rates at the auction on Wednesday. Although market remains relatively quiet, average yields moved to 12.82% (+5bps).

BILLS: Bearish sentiment was sustained in the market yesterday as average yields tipped higher to 12.18% (+9bps). The CBN was out in the market for the first time this week offering 105d and 133d bills; however allotted less than 50% of subscription (About N 27.5B) as bid rates may have been too high. We expect another series of OMO auctions soon as FAAC allocation inflow draws nearer.

MONEY MARKET: OBB and ON rates dropped to 10.75% and 11% respectively.

US: The prospect of rising interest rates in 2014 is sending shares of high-dividend-yielding companies lower as fixed-income assets become more attractive to investors. The dividend index — made up of 100 companies has weakened since the Federal Reserve began bracing investors for a phase-out of its unprecedented monetary stimulus. At the conclusion of a two-day meeting May 1, the Federal Open Market Committee said in a statement it was “prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.

EUROPE: The euro reached a five-year high against the yen, heading for a fifth weekly advance, before European Central Bank Vice President Vitor Constancio and executive board members Benoit Coeure and Peter Praet speak today. The ECB kept its benchmark rate unchanged this month. Vice President Constancio said in a November interview that a negative deposit rate would be invoked only in “quite extreme situations” and the council is “not really near a decision. Coeure said this month the ECB would consider offering more long-term loans to banks only when they are in a position to lend to companies and households.

CHINA: Yuan forwards were headed for the biggest three-day decline since July on concern the Federal Reserve will soon reduce stimulus that has boosted demand for emerging-market assets. Chinese policy makers may cut the nation’s 2014 economic growth target to 7 percent from 7.5 percent at an annual conference. The onshore Yuan slipped 0.03 percent to 6.0732 per dollar today in Shanghai, China Foreign Exchange Trade System prices show. The currency advanced 0.14 percent this week and touched 6.0703 on Dec. 10, the strongest level since the government unified the market and official exchange rates at the end of 1993

COMMODITIES: WTI Intermediate crude headed for a weekly drop amid speculation that the Federal Reserve will slow the pace of economic stimulus in the U.S., the world’s biggest oil consumer. WTI for January delivery slid 13 cents to $97.37 a barrel on the New York Mercantile Exchange at 2 p.m. Singapore time. It rose 6 cents to $97.50 yesterday.

Indicative Currency Exchange Rates
Bid      Offer

EURUSD            1.3752       1.3802
GBPUSD            1.6342       1.6392
USDJPY             103.65       104.05
USDCHF            0.8894      0.8924
GBPEUR            1.1883       1.1893
USDZAR            9.8025      9.9525
USDNGN           158.10       158.40
JPYNGN            1.5253       1.5753
CHFNGN           177.76       181.76
EURNGN            217.42     221.42
GBPNGN            258.37     262.37
ZARNGN            16.13        18.13

Commodities
WTI Intermediate crude headed for a weekly drop amid speculation that the Federal Reserve will slow the pace of economic stimulus in the U.S., the world’s biggest oil consumer. WTI for January delivery
slid 13 cents to $97.37 a barrel on the New York Mercantile Exchange at 2 p.m. Singapore time. It rose 6 cents to $97.50 yesterday.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              11.8333       USD 1 month           0.1666
7 Day            12.8333      USD 2 month           0.2140
30 Day         12.6667       USD 3 month          0.2428
60 Day         12.9167        USD 6 month         0.3441
90 Day         13.1667       USD 12 month        0.5763
Y/Y Consumer Inflation April 2013 :               7.80%
FX Reserves: 11 December 2013 (USD bn)  44.621
MPR                                                                     12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

Fx
                              Hi               Low           Close         Prev.Close
USD/NGN    158.52/62    157.95/05    158.40/50     158.63/73

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