A Review of the Nigerian Energy Industry

Financial market update

Financial-market04 February 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Federal Government on Sunday reassured Nigerians, especially industrialists, of steady electricity supply in a very short time. Prof. Chinedu Nebo, the minister of power, gave the assurance at the investiture of the newly elected president and council of the Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA) in Enugu. According to him, the down¬turn in the power sector is only temporal, and he stated that the government is doing everything possible to provide stable electricity..

BONDS: Continuous selloff in the secondary market yesterday as yields appreciated generally in all traded securities. The shorter tenors had higher yields than the longer tenures. Average yield closed at 13.55%.

BILLS: Bearish sentiment in the market yesterday taking average yields higher by 17bps across the curve except for the 136D which declined by 1bps. The short end of the curve continued to be the main driver as the 10Day bill rose by 84bps. It is going to be an action packed week as we have the 75% CRR debit and primary market auction on Wednesday.

MONEY MARKET: OBB and ON rates closed higher by 10bps and 25bps to 10.25% and 10.50% respectively despite the high level of liquidity in the system

COMMODITIES: WTI traded near the lowest price in a week amid speculation crude inventories increased in the U.S., the world’s biggest oil consumer. WTI for March delivery was at $96.58 a barrel in electronic trading on the New York Mercantile Exchange, up 15 cents,

FX: The USDNGN pair saw flows on the bid and the offer for most part of the day, but the pair depreciated, towards the close of market, pushing rates to a 3 day’s high of 162.95/05. The pair closed 43 points above Friday’s level. Expectation is for this trend to be short-lived as market expects huge inflow from the state owned oil company this week, as well NGN 800 billion debit from the money market due to the CRR hike on public sector deposits which is expected to curb market’s appetite for USD.

CBN RDAS AUCTION: CBN offered $400 mio and sold $399.97 mio at yesterday’s RDAS auction with 18 banks in participation. Marginal rate was maintained at 155.75 (1% commission excluded) for the fourth consecutive auction.

US: Janet Yellen was sworn in Monday to a term as chair of the U.S. central bank, the Federal Reserve said in a statement. Yellen succeeds Ben Bernanke to become the first woman to head the Fed. Her term as chair ends February 3, 2018.The oath was administered by Governor Daniel Tarullo, the Fed said.

JAPAN: Bank of Japan Governor Haruhiko Kuroda on Tuesday stressed that the country will see 2 percent inflation around the latter half of fiscal 2014 through early fiscal 2015. Kuroda told parliament that Japan is making steady progress toward achieving 2 percent. The BOJ offered an intense burst of monetary stimulus in April last year, pledging to double base money via aggressive asset purchases to achieve 2 percent inflation in roughly two years in a country mired in deflation for 15 years.

Macro Economic Indicators
Inflation rate (yoy) for Dec. 2013            8%
Monetary Policy Rate current                 12%
FX Reserves (Bn $) as at Jan. 29        43.121

Money Market Highlights

O/N                                 10.5000
7 Day                               10.8333
30 Day                             11.3750
60 Day                             11.7500
90 Day                             12.0417
USD 1 Month                   0.1571
USD 2 Months                 0.1998
USD 3 Months                 0.2356
USD 6 Months                 0.3335
USD 12 Months               0.5629

Benchmark Yields
Tenor                Maturity            Yield (%)

91 days                24-Apr-14             12.25
182 days             07-Aug-14             12.50
364 days             22-Jan-15              13.40
2 years                 23-Apr-15             12.62
4 years                31-Aug-17              13.08
5 years                30-May-18            13.12

Indicative Currency Exchange Rates
Bid          Offer

EURUSD        1.3531        1.3581
GBPUSD        1.6276        1.6326
USDJPY         100.96       101.36
USDCHF        0.9017       0.9047
GBPEUR        1.2029       1.2039
USDZAR        11.2055     11.3555
USDNGN       162.88       163.18
JPYNGN        1.6133        1.6633
CHFNGN       180.64      184.64
EURNGN       220.39     224.39
GBPNGN       265.10      269.10
ZARNGN         14.54        16.54

Hi              Low             Close       Prev.Close
   162.95/05   162.20/30   162.88/98    162.45/55

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