A Review of the Nigerian Energy Industry

Financial market update

finance20 January 2014, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Latest preliminary numbers emerging from Nigeria’s Gross Domestic Product rebasing exercise are already suggesting that the nation’s economy could show as much as a 65 percent uplift in size, when the long awaited report is released. This would show as much as $432 billion in GDP size, placing Nigeria as the largest economy in Africa. The latest figures are way higher than earlier projections, suggesting that the Nigerian economy has been hugely underestimated over the years.

BONDS: The short end was well bid on Friday, as we saw the August 2016 bond decline further by 16bps to close at 13.00% (now 10bps lower than cut-off at the auction last week). The mid to longer end of the curve was fairly traded, however inching higher by 2 – 5 bps. MPC meeting would set the direction for yields this week.

BILLS: Just when everything appeared to be returning back to normal as the Central bank announced its offering of OMO auction on Friday to mop up liquidity in the already flush system currently above N 1.1 Trillion ($6.9 billion), it came as a surprise that no sale was made even with the healthy N 357 billion subscription. With so much liquidity, the secondary market continued bid, driving yields down even further by an average of 11bps on Friday, across the whole curve. Cautiousness expected as we go into the MPC meeting at the start of this week.

MONEY MARKET: OBB and ON rates dropped to 10.15% and 10.25% respectively.

US: U.S. industrial output rose at its fastest clip in 3-1/2 years in the fourth quarter as factory activity closed out the year on a strong note, a sign of the economy’s brightening prospects. Manufacturing production rose a stronger-than-expected 0.4 percent in December after an out-sized 1.0 percent increase the prior month, a Federal Reserve report on Friday showed. That helped push overall output at the nation’s factories, mines and utilities up 0.3 percent last month.

CHINA: China’s economy grew 7.7 percent in 2013 after easing in the final three months on sagging investment growth, a cool down that some analysts say is a sign of the more sober times ahead as the government wrestles to implement major reforms. With China stepping up its efforts to remake its economy by promoting domestic consumption at the expense of exports and investment, some analysts predicted that the world’s second-largest economy may lose further momentum this year.

COMMODITIES: WTI crude slid from the highest closing price in two weeks after government data showed that industrial output slowed last month in China, the world’s second-biggest oil consumer. WTI for February delivery fell as much as 76 cents to $93.61 a barrel in electronic trading on the New York Mercantile Exchange, and was at $93.68.

Macro Economic Indicators
Inflation rate (yoy) for Dec. 2013              8.0%
Monetary Policy Rate current                    12%
FX Reserves (Bn $) as at Jan. 14             43.242

Money Market Highlights

O/N                                            10.5833
7 Day                                          10.8333
30 Day                                       11.0833
60 Day                                       11.3750
90 Day                                       11.6667
USD 1 Month                            0.1570
USD 2 Months                          0.2023
USD 3 Months                          0.2366
USD 6 Months                          0.3346
USD 12 Months                        0.5721

Benchmark Yields
Tenor                  Maturity             Yield (%)
91 days                   17-Apr-14               11.02
182 days                05-Jun-14               11.96
364 days                08-Jan-15               12.96
2 years                    23-Apr-15              12.29
4 years                    31-Aug-17              12.59
5 years                    30-May-18             12.63

Indicative Currency Exchange Rates
Bid         Offer

EURUSD          1.3534      1.3584
GBPUSD           1.6419      1.6469
USDJPY            104.16      104.56
USDCHF           0.9115      0.9145
GBPEUR           1.2132       1.2142
USDZAR           10.889      11.039
USDNGN          159.50       159.80
JPYNGN            1.5313       1.5813
CHFNGN           174.99      178.99
EURNGN           215.87      219.87
GBPNGN            261.88     265.88
ZARNGN            14.65         16.65

                               Hi               Low           Close          Prev.Close
USD/NGN   160.30/40    159.40/50     159.70/80     159.93/03

In this article

Join the Conversation