A Review of the Nigerian Energy Industry

Financial market update

Financial markets31 March 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The total amount of Deposit Money Banks’ (DMBs’) reserves with the Central Bank of Nigeria (CBN) stood at N3.7 trillion at the end of February, 2014, the central bank has said. According to the latest central bank money and credit statistics for February, the amount represents a decrease of N116 billion, compared to the N3.816 trillion recorded in January 2014. Bank reserves are DMBs’ deposits with the central bank that are not to be lent out. It is held as part of risk management measures. The amount is expected to rise further as a result of the Monetary Policy Committee (MPC) decision to raise the Cash Reserve Requirement (CRR) for private sector deposits to 15 per cent.

FIXED INCOME: Fairly quiet end to last week as we saw tbill yields rise by about 5bps on the average as market appetite weakened at the secondary market. The 55DTM bill (22-May) witnessed the most pressure closing 31bps higher at 12.74% from 12.43%. Market continued its crave for the OMO bills as the CBN conducted another successful OMO auction. Total sales were NGN113 billion – 88% higher than the initial amount of NGN60bn offered. Stop rate unchanged at 13.10% (yield 13.83%). Market liquidity was at NGN679billion as at the start of Friday. The bond market remained largely quiet.

COMMODITIES: West Texas Intermediate crude traded near the highest close in three weeks and headed for a quarterly advance as the U.S. and Russia sought to defuse the crisis over Ukraine. WTI for May delivery was at $101.42 a barrel in electronic trading on the New York Mercantile Exchange.

FX: Market remained tightly traded on Friday, with spot moving within a 25 points range. Rates flirted with the 165 range again, hitting a high of 165.15/25. Market was majorly flow driven and closed at about previous level.

EUROPE: France cut its public sector deficit less quickly than planned last year, missing the government’s target, official figures showed on Monday in a new setback for President Francois Hollande. The public deficit fell to 4.3 percent of gross domestic output (GDP) from 4.9 percent the previous year, the INSEE national statistics office said. That meant that Hollande’s government missed its deficit target of 4.1 percent, which it had promised its EU partners it would meet.

CHINA: China’s foreign exchange regulator said on Monday that it does not see any risk in the country’s relatively high ratio of short-term foreign debt to total foreign debt, noting that the country had a large pile of foreign reserves to fall back on. China’s outstanding short-term foreign debt accounted for 78 percent of total outstanding foreign debt at the end of last year, reports stated. The figure is higher than the internationally accepted safety line of 25 percent.

Macro Economic Indicators
Inflation rate (yoy) for Feb. 2014          7.7%
Monetary Policy Rate current                12%
FX Reserves (Bn $) as at Mar. 26      37.830

Money Market Highlights

O/N                                10.7500
7 Day                              10.9583
30 Day                           11.3750
60 Day                           11.7083
90 Day                           11.9583
USD 1 Month               0.1518
USD 2 Months            0.1964
USD 3 Months            0.2334
USD 6 Months            0.3289
USD 12 Months          0.5586

Benchmark Yields
Tenor          Maturity        Yield
91d                 19-Jun-14         12.40
182d              04-Sep-14         13.61
364d              05-Mar-15        15.00
2y                   23-Apr-15         13.91
4y                   31-Aug-17         13.66
5y                   30-May-18       13.62

Indicative Currency Exchange Rates
                         Bid          Offer
EURUSD        1.3708      1.3809
GBPUSD         1.6588      1.669
USDJPY         102.975     102.995
USDCHF         0.8811      0.8913
GBPEUR        1.1931        1.2033
USDZAR        10.4884    10.6930
USDNGN         164.55      165.34
JPYNGN         1.5707       1.7207
CHFNGN        187.26      192.86
EURNGN         227.56      232.76
GBPNGN          273.06     278.26
ZARNGN            14.32       18.12

Hi               Low               Close     Prev.Close

USD/NGN  165.16/26     164.80/90     164.90/02    164.90/00

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