A Review of the Nigerian Energy Industry

Financial market update

Financial-markets25 February 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: President Goodluck Jonathan has assured Nigerians that all allegations pertaining to the alleged disappearance of billions of dollars from the Nigerian National Petroleum Corporation (NNPC) would be thoroughly investigated. Speaking at a presidential media chat, Jonathan said the allegations involve a lot of money and he would not preside over the nation and allow funds disappear from the government treasury.

BONDS: Markets opened on a bullish note before settling for a quiet afternoon yesterday. We have not seen the massive sell-off witnessed last week in the fixed income space by offshore investors.

BILLS: The Treasury Bills market maintained a bullish note through the day though the long end of the curve remained flat. There was another OMO auction yesterday and even though demand was higher than what we saw last week, no sale was made due to the perceived high bid levels indicated by market participants.

MONEY MARKET: OBB and ON rate closed at 10.75% and 10.95% respectively.

FX: The USDNGN remains volatile as yesterday saw rates hit a high on the 166 level after opening at the 165 level. Rates retraced to the 165 level before CBN intervention dipped rates further to close at 163.20/30 and give the Naira significant appreciation from previous close.

CBN RDAS: CBN offered $400 million and sold $399.73 million at yesterday’s RDAS auction with 22 banks in participation. Marginal rate was maintained at 155.75 (1% commission excluded) for the 10th consecutive auction.

COMMODITIES: West Texas Intermediate fell for the third time in four days before a government report forecast to show U.S. crude stockpiles are expanding while prices are near a technical level that signals gains may have been excessive. WTI for April delivery fell as much as 44 cents to $102.38 a barrel in electronic trading on the New York Mercantile Exchange.

US: Unusually cold weather will take a bite out of U.S. economic growth this quarter, but a rebound seems likely on the horizon and expectations for stronger growth this year have not changed. Economists estimate that freezing temperatures and the ice and snow storms that have blanketed much of the nation will shave as much as half a percentage point from gross domestic product in the first quarter.

EU: The euro held the biggest drop in more than a week versus the pound on bets the European Central Bank may add to monetary stimulus next week. The 18-nation currency remained lower against the yen from yesterday before the ECB publishes its inflation projection for 2016 on March 6. The Bloomberg U.S. Dollar Index headed for its biggest monthly drop since September as Citigroup Inc.’s U.S. Economic Surprise Index showed data was the weakest in seven months. Norway’s krone and the Australian and New Zealand dollars led monthly gains amid higher commodity prices.

Macro economic Indicators
Inflation rate (yoy) for Jan. 2014     8%
Monetary Policy Rate current          12%
FX Reserves (Bn $) as at Feb. 21    41.047

Money Market Highlights
O/N                            11.2083
7 Day                          11.5417
30 Day                       11.7919
60 Day                      12.1250
90 Day                      12.3750
USD 1 Month           0.1545
USD 2 Months        0.1947
USD 3 Months        0.2344
USD 6 Months        0.3305
USD 12 Months      0.5553

Benchmark Yields
Tenor         Maturity         Yield (%)
91 days        29-May-14         13.06
182 days      04-Sep-14         13.28
364 days     05-Feb-15          14.41
2 years        23-Apr-15          13.55
4 years         31-Aug-17         13.25
5 years        30-May-18        13.24

Indicative Currency Exchange Rates
                            Bid      Offer
EURUSD       1.3735    1.3785
GBPUSD       1.6668    1.6718
USDJPY        102.53    102.93
USDCHF      0.8884   0.8914
GBPEUR      1.2135     1.2145
USDZAR       10.78       10.93
USDNGN      162.70   163.00
JPYNGN       1.5869   1.6369
CHFNGN      183.14   187.14
EURNGN     223.47   227.47
GBPNGN      271.19    275.19
ZARNGN       15.09     17.09

                               Hi              Low        Close       Prev.Close
USD/NGN   166.75/85 163.05/15 163.20/30 165.55/65

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