A Review of the Nigerian Energy Industry

Financial market update

Financial-markets26 February 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The suspended Governor of the Central Bank of Nigeria, Lamido Sanusi, has dragged President Goodluck Jonathan before an Abuja Federal High Court, challenging his suspension from office. In the application filed on his behalf by his lawyer, Kola Awodein, SAN, Sanusi is asking the court to restrain the President, the Attorney General of the Federation and the Inspector General of Police from giving effect to his purported suspension from office as the Governor of the CBN, pending the determination of the suit.

BONDS: Mixed investor sentiments dominated the bond market yesterday, as yields on the short to medium end of the curve declined while the long end increased. Average yields declined marginally by 1bps to 13.77%.

BILLS: The bullish run in the Treasury bill market continued yesterday as demand spread across all maturities traded driving average yields lower by 66bps to 13.23%. Average yields on bills are now back to the levels seen prior to the announcement of the CBN Governor’s suspension. The CBN again offered OMO bills of NGN50BN on the 93days bill but recorded no sales. Market subscription for the OMO was about NGN23.3bn at bid range of 12.20% – 14.50%.

MONEY MARKET: OBB and O/N closed higher at 11.00% and 11.25% respectively.

FX: Market had a huge boost in USD liquidity with sales from 4 oil majors estimated to be over $170 million enough to keep rates below the 165 levels. The USDNGN opened at 163.90/00 and saw an initial USD sell off which kept rates relatively stable at the 163 range. However, strong demand had rates hitting the 164 level intermittently and a late bullish run ensured the pair closed at 164.50/60.

COMMODITIES: West Texas Intermediate traded near the lowest price in more than a week. An industry report showed stockpiles declined at the delivery point for U.S. crude contracts. WTI for April delivery was at $101.80 a barrel, down 3 cents, in electronic trading on the New York Mercantile Exchange

US: Republicans in Congress are seeking to bridge internal divisions in order to lift US borrowing limits as dwindling government funding threatens to spark a new brush with sovereign default in less than three weeks. To avert another fiscal crisis, John Boehner, speaker of the House of Representatives, needs to persuade fellow Republican lawmakers to pass a bill that would raise the debt ceiling. The Obama administration turned up the pressure on Republicans when Jack Lew, treasury secretary, told Mr Boehner in a letter that he had until the end of February to reach a solution.

EU: Germany is set to accelerate away from France and Italy in 2014 as the fragmented euro zone economy gradually recovers from its worst crisis, the European Commission said on Tuesday. In a departure from the gloom of recent years, the Commission slightly increased its growth prediction for the bloc’s 9-trillion-euro economy to 1.2 percent in 2014 from an earlier 1.1 percent. It was powered chiefly by an expected 1.8 percent jump in the euro zone’s biggest economy Germany.

Macro Economic Indicators
Inflation rate (yoy) for Jan. 2014        8%
Monetary Policy Rate current            12%
FX Reserves (Bn $) as at Feb. 24     40.689

Money Market Highlights
O/N                                 11.4583
7 Day                               11.7500
30 Day                            12.0000
60 Day                            12.2917
90 Day                            12.5417
USD 1 Month                0.1545
USD 2 Months              0.1940
USD 3 Months             0.2336
USD 6 Months             0.3305
USD 12 Months           0.5533

Benchmark Yields
Tenor               Maturity         Yield (%)
91 days              29-May-14        12.84
182 days            04-Sep-14         12.76
364 days            19-Feb-15         14.14
2 years                23-Apr-15       13.63
4 years                31-Aug-17       13.21
5 years               30-May-18       13.23

Indicative Currency Exchange Rates
Bid        Offer

EURUSD       1.3739    1.3789
GBPUSD        1.6675    1.6725
USDJPY         102.28   102.68
USDCHF        0.887     0.89
GBPEUR        1.2137    1.2147
USDZAR        10.68     10.83
USDNGN       164.00   164.30
JPYNGN        1.6034   1.6534
CHFNGN       184.89  188.89
EURNGN      225.32   229.32
GBPNGN      273.47    277.47
ZARNGN       15.36      17.36

                                 Hi                Low           Close        Prev.Close
USD/NGN   164.80/90    163.15/25   164.50/60   163.20/30

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