A Review of the Nigerian Energy Industry

Financial market update

Financial-markets04 March 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria and France have launched the Nigeria-France Trade and Investment Council, setting a target to double trade flows between both countries from the current N1.049tn to about N2.098tn in four years. The statement launching the Council was signed in the presence of President Goodluck Jonathan and his counterpart, French President Francois Hollande, during the Nigeria-France Business Forum, on the sidelines of the Centenary celebrations in Abuja.

FIXED INCOME: The week opened with the CBN offering 126 days OMO auction and sold NGN52billion at a stop rate of 13.10%. Although the OMO announcement had little or no effect in the secondary market as mixed performance was witnessed across the curve taking average yield flat to Friday’s close of 13.17%. The 10DTM paper and most mid tenor maturities recorded marginal gains as yields compressed by an average of 27bps while the long term papers advanced in yields by an average of 5bps. Similar to the Bills market, the Bond market also closed flat yesterday as the market remained quiet. We anticipate another flat session in the bills market today as market trades cautiously ahead of the primary market auction scheduled for Wednesday which is expected to provide further trading direction.
OBB and ON closed at 11.25% and 11.505% respectively.

COMMODITIES: West Texas Intermediate and Brent crude fell for the first time in three days amid speculation supply concerns because of tension between Russia and Ukraine may be exaggerated. WTI for April delivery slid as much as $1.01 to $103.91 a barrel in electronic trading on the New York Mercantile Exchange and was at $104.06 at 2:53 p.m. Singapore time.

EUROPE: High unemployment will keep demand weak “for some time to come”, says ECB president, adding to disinflationary pressure. Mario Draghi said the current rate of inflation – 0.8pc – was “way below” the ECB’s 2pc target and would remain low for a “protracted” period of time. While Mr Draghi said current disinflationary pressures were mainly caused by global factors such as lower energy and food prices, high unemployment would keep demand weak “for some time to come”, meaning much-needed domestic recoveries would lag revivals in exports.

INDIA: India’s economy grew 4.7 percent in the three months ended in December from the same period a year earlier, government data showed Friday, evidence that the economic slump in the country is far from over. Economists said the country’s recovery would be somewhat delayed by the national elections in April and May. In the previous two quarters, the economy expanded 4.8 percent and 4.4 percent, respectively.

Macro Economic Indicators
Inflation rate (yoy) for Jan. 2014    8%
Monetary Policy Rate Current         12%
FX Reserve (Bn $) as at Feb.28      40.116

Money Market Highlights

O/N                         11.2917
7 Day                       11.6667
30 Day                    11.9583
60 Day                    11.2917
90 Day                    12.5833
USD 1 Month        0.1553
USD 2 Months      0.1961
USD 3 Months      0.2357
USD 6 Months      0.3305
USD 12 Months    0.5538

Benchmark Yields
Tenor                Maturity           Yields
91days              05-June-14      12.81%
182days           04-Sept-14       13.23%
364days           19-Feb-15        14.48%
2yrs                  23-Apr-15        14.22%
4yrs                  31-Aug-17        13.77%
5yrs                  30-May-18       13.77%

Indicative Currency Exchange Rates
Bid         Offer

EURUSD       1.3752      1.3762
GBPUSD        1.6686     1.6696
USDJPY         101.83     102.23
USDCHF       0.8835    0.8855
GBPEUR       1.2132     1.2142
USDZAR       10.8145   10.9145
USDNGN      163.50     164.25
JPYNGN       1.6056     1.6556
CHFNGN      185.06    189.06
EURNGN      224.85   228.85
GBPNGN      272.82    276.82
ZARNGN       15.12      17.12

                                  Hi             Low           Close      Prev.Close
USD/NGN   165.15/25   163.55/65   163.85/95   164.75/85

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