A Review of the Nigerian Energy Industry

Financial market update

Financial markets28 January 2014, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Nigeria will release its rebased gross domestic product (GDP) statistics in about two weeks. Reports say that the new numbers will show Nigeria’s GDP rising by 65 percent to $432 billion, meaning the country has overtaken South Africa as Africa’s largest economy. The figure confirmed by sources at the National Bureau of Statistics (NBS) suggests that the Nigerian economy has been hugely underestimated over the years.

BONDS: There was profit taking activities in the bond space yesterday as selling pressure drove average yields higher by 10bps to 13.17%. Yields rose across the curve with the greatest impact on the 15’s (+25bps)

BILLS: Secondary market opened yesterday with the CBN offering OMO bills worth N90 Billion on 129D and 143D which was largely oversubscribed. CBN sold N96.82 Billion on the 129D and N100.28 Billion on the 143D at 12.05% and 12.10% stop rates respectively. The announcement of the OMO triggered volatility in the secondary market, consequently driving average yields higher by 5bps to 11.82%.

MONEY MARKET: OBB and ON rates remained at 10.15% and 10.25% respectively.

COMMODITIES: WTI traded near the lowest price in a week amid speculation that a government report will show crude stockpiles increased in the U.S., the world’s biggest oil consumer. WTI for March delivery was at $95.85 a barrel, up 13 cents, in electronic trading on the New York Mercantile Exchange at 1:36 p.m. Singapore time

FX: The pair closed at its weakest level in 4 months yesterday as the pressure on the local unit worsened following CBN’s circular last Friday, to remove the cap on the amount of USD banks are allowed to sell to the Bureau De Change dealers in a bid to converge rates in the official and parallel markets. There were also some offshore RHS flows. These amplified the level of demand in the interbank market, driving rates to 19 weeks high of 163.40/50 and it took a CBN intervention to retrace rates slightly to close at 162.30/40. Market is expected to remain well bid in the short term pending any significant oil inflows.

US: President Barack Obama will lay out a strategy for getting around a divided Congress and boosting middle-class prosperity on Tuesday in a State of the Union speech that reflects some scaled-back legislative ambitions after a difficult year. Obama will make clear in his address that he is willing to bypass U.S. lawmakers and go it alone in some areas by announcing a series of executive actions that do not require congressional approval.

EU: Euro zone countries are worried by the problems hitting emerging economies but do not believe there is a risk of contagion. The head of the Euro group which gathers the finance ministers of countries that use the single currency, insisted that the euro’s fragile recovery was not threatened.

Macro Economic indicators
Inflation rate (yoy) for Dec. 2013       8%
Monetary Policy Rate current            12%
FX Reserves (Bn $) as at Jan. 22   43.241

Money Market Highlight

O/N                         10.5000
7 Day                       10.8333
30 Day                     11.4583
60 Day                     11.7917
90 Day                     12.0417
USD 1 Month         0.15850
USD 2 Months       0.20050
USD 3 Months       0.23610
USD 6 Months       0.33250
USD 12 Months     0.57100

Benchmark Yields
Tenor                 Maturity           Yield (%)

91 days                 17-Apr-14             10.77
182 days              05-Jun-14             12.03
364 days              08-Jan-15             12.85
2 years                 23-Apr-15             12.26
4 years                 31-Aug-17             12.59
5 years                 30-May-18            12.62

Indicative Currency Exchange Rates
Bid         Offer

EURUSD          1.3685        1.3735
GBPUSD           1.6616        1.6666
USDJPY            102.63        103.03
USDCHF           0.8956      0.8986
GBPEUR           1.2142       1.2152
USDZAR         11.1022       11.2522
USDNGN         162.30       162.60
JPYNGN           1.5814       1.6314
CHFNGN          181.22       185.22
EURNGN          222.11       226.11
GBPNGN         269.68       273.68
ZARNGN           14.62        16.62

                                 Hi              Low             Close       Prev.Close
USD/NGN     163.40/50     160.8595     162.30/40     160.40/50

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