A Review of the Nigerian Energy Industry

Financial market update

Financial markets03 April 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Federal Government will on Sunday release the country’s new Gross Domestic Product figure, 15 years after the current one was released. The country is supposed to be releasing the figure every five years. The Minister of Information, Mr. Labaran Maku, disclosed the plan to State House correspondents on Wednesday at the end of the weekly Federal Executive Council meeting presided over by Vice President Namadi Sambo. Maku quoted the Minister of Finance, Dr. Ngozi Okonjo-Iweala, by informing the council that the country was ready to rebase its GDP after over one year of hard work by the ministries of Finance and National Planning, the Chief Statistician of the Federation and international agencies like the International Monetary Fund, African Development Bank and the International Development Bank.

FIXED INCOME: Bullish momentum sustained in both bills and bonds market as buying pressure drove yields downwards by an average of 20bps and 16bps to 13.09% and 13.63% respectively. All maturities experienced decline in yields save for the 78DTM & 141DTM paper and Aug 2016s bond. The CBN announced another OMO auction yesterday (third this week), offering NGN50billion on the 134DTM, with sales amounting to NGN48.2billion at a stop rate of 13.10% discount (bid range: 13.00% – 13.10%). 133DTM paper started trading yesterday at the secondary market, yield closed at 13.55%. Primary market auction on bills next week Wednesday – 9th April 2014 and on auction is NGN20.15 billion on the 91-day paper, NGN43.49 billion on the 182-day paper and NGN120 billion on the 364-day paper, using the Dutch auction system. O/N and OBB rate closed slightly higher by 25bps to 10.75% and 10.50% respectively.

COMMODITIES: West Texas Intermediate fell for a fourth day, the longest losing streak in three months, amid speculation reduced Chinese and U.S. growth will curb demand in the world’s biggest oil users. WTI for May delivery declined as much as 45 cents to $99.17 a barrel in electronic trading on the New York Mercantile Exchange.

FX: Significant gains for the local unit yesterday as market saw a boost in USD liquidity on the back of inflow from an oil company as well as renewed offshore interest in the fixed income market. The pair traded at the 163 levels and closed at its strongest level in over four weeks. Naira is expected to further strengthen in the short term as market anticipates dollar sales from the state owned oil company in the next few days.

CBN RDAS AUCTION: CBN offered $400 million and sold $268.24 million at yesterday’s RDAS auction. Marginal rate was maintained at 155.74 (1% commission exclusive) from previous auction.

US: Two top policymakers said on Wednesday the Federal Reserve was in no rush to raise interest rates and would have to see improvements in the U.S. economy to do so. The comments from St. Louis Fed President James Bullard and Dennis Lockhart of the Atlanta Fed, though not ground breaking, did reinforce the notion that accommodative monetary policies would remain in place for a while to come despite intense market speculation over the timing of tightening.

CHINA: Persistent weakness in China’s manufacturing sector reinforced fears of a sharper-than-expected slowdown at the start of 2014, and some government economists think authorities have already started boosting spending to put a floor under growth. On Tuesday two surveys showed that manufacturing struggled in March, with activity at smaller, private firms contracting for a third month, adding to a run of disappointing data that has sparked speculation of imminent government-led stimulus.

Macro Economic Indicators
Inflation rate (yoy) for Feb. 2014         7.7%
Monetary Policy Rate current               12%
FX Reserves (Bn $) as at Mar. 28    37.803

Money Market Highlights

O/N                             10.7500
7 Day                          11.0000
30 Day                       11.3750
60 Day                       11.7083
90 Day                       11.9583
USD 1 Month            0.1520
USD 2 Months         0.1915
USD 3 Months         0.2301
USD 6 Months         0.3280
USD 12 Months       0.5551

Benchmark Yields
Tenor              Maturity           Yield

91d                    03-Jul-14              12.94
182d                 04-Dec-14             13.27
364d                05-Mar-15             13.82
2y                     23-Apr-15              13.34
4y                     31-Aug-17              13.08
5y                    30-May-18              13.09

Indicative Currency Exchange Rates
Bid           Offer

EURUSD       1.3714         1.3816
GBPUSD       1.6603        1.6705
USDJPY        103.925     103.955
USDCHF       0.8818       0.8921
GBPEUR       1.1931        1.2033
USDZAR     10.5402     10.7463
USDNGN     163.60        164.30
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     164.70/80     163.75/85     163..90/00   164.60/70

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