A Review of the Nigerian Energy Industry

Financial market update

finance31 December 2013, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Nigeria’s state-backed rescue bank AMCON retired 4.6878 trillion Nigerian Naira worth of bonds on Monday, cutting its liabilities by more than half. Spokesman for AMCON, Kayode Lambo, said that there remained 3.9 trillion Naira of debt outstanding, which would be refinanced by the Central Bank at a low rate.

BONDS: No trading yesterday as the market winds down for year end.

BILLS: CBN sold about N101 Billion 136day bill at the OMO auction yesterday. Although yields remained high at the auction, the market appeared to be in sync with the CBN – in terms of cap on the cut-off rates – as the same bids were presented by all banks (just like in the previous auction). With more bill maturities due this week, we expect to see more auctions. Secondary market trading remained very quiet.

MONEY MARKET: OBB and ON rates both at 10.50%. Liquidity in the system is in excess of N 400 Billion.

FX: Volatile market yesterday with the local unit depreciating further as market was well bid (a lot of demand in the market) and no LHS side flow to curb movement. CBN is likely to intervene today so as not to show high rates into the New Year.

US: Bond investors worldwide who were stung by their first annual losses since 1999 are bracing for more declines as the Federal Reserve pulls back on stimulus that’s supported fixed-income markets for five years. Debt globally fell 0.4 percent in 2013 as losses of 3.4 percent in U.S. Treasuries offset the 1.2 percent gain in corporate debt that was led by a 7 percent return in high yield, according to reports.

CHINA: China’s local-government debt swelled to 17.9 trillion Yuan ($2.95 trillion), underscoring risks to the financial system as President Xi Jinping rolls out economic reforms. Debt including contingent liabilities rose about 13 percent in the six months through June, based on figures in a report by the National Audit Office, posted on its website yesterday. That followed a 48 percent increase over the previous two years.

COMMODITIES: West Texas Intermediate is poised for the fourth annual increase in five years amid speculation crude supplies shrank for a fifth week in the U.S., the world’s largest oil consumer. WTI for February delivery was at $99.20 a barrel in electronic trading on the New York Mercantile Exchange.

Macro Economic Indicators
Inflation rate (yoy) for Nov. 2013         7.9%
Monetary Policy Rate current                12%
FX Reserves (Bn $) as at Dec. 24      43.880

Money Market Highlights

O/N                                    10.7917
7 Day                                  11.0833
30 Day                               11.3333
60 Day                               11.5833
90 Day                               11.8333
USD 1 Month                    0.1702
USD 2 Months                  0.2128
USD 3 Months                  0.2466
USD 6 Months                  0.3485
USD 12 Months                0.5831

Benchmark Yields
Tenor                Maturity             Yield (%)

91 days                 27-Mar-14             11.97
182 days               05-Jun-14             11.58
364 days              04-Dec-14             12.36
2 years                  23-Apr-15             12.71
4 years                  31-Aug-17             12.58
5 years                  30-May-18           12.57

Indicative Currency Exchange Rates
Bid         Offer

EURUSD      1.3787      1.3837
GBPUSD       1.6514      1.6564
USDJPY        104.96     105.36
USDCHF       0.889       0.892
GBPEUR       1.1519       1.1529
USDZAR      10.4533   10.6033
USDNGN     160.92      161.22
JPYNGN       1.6238     1.6738
CHFNGN      172.05     176.05
EURNGN      212.18     216.18
GBPNGN      244.41     248.41
ZARNGN       16.19        18.19

Hi              Low           Close       Prev.Close
     161.13/23    160.60/65   161.12/22    160.50/60

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