A Review of the Nigerian Energy Industry

Financial market update

Financial markets 107 April 2014, Sweetcrude, Lagos – Local and international financial markets products and services update.
NIGERIA: Nigeria has overtaken South Africa as Africa’s largest economy after a rebasing calculation almost doubled its gross domestic product to more than $500 billion, data from the statistics office showed on Sunday. GDP for 2013 in Africa’s top oil producer was 80.22 trillion naira, or $509.9 billion, the Nigeria Bureau of Statistics said, up from the 42.3 trillion estimated before the rebasing. The new figure shrank Nigeria’s debt-to-GDP ratio to 11 percent for 2013, against 19 percent in 2012, statistics Chief, Yemi Kale told reporters in the capital of Abuja.

FIXED INCOME: Bond market closed 6bps lower having seen a bullish run all through last week. Yields declined across the curve save for the 2016s and 2030s which traded flat. Bills market opened 10bps lower but by the end of market, we saw a slight reversal as average yields went lower to Wednesday’s close (by 2bps to 13.09%). Week on week, we have seen yields decline across all maturities by an average of 41bps and 35bps on bills and bonds respectively. Surprisingly no OMO auction on Friday despite liquidity levels still high at about NGN501 billion. O/N and OBB rate remained at 10.75% and 10.50% respectively.

COMMODITIES: West Texas Intermediate in New York fell. WTI for May delivery dropped as much as 25 cents to $100.89 a barrel in electronic trading on the New York Mercantile Exchange.

FX: Market witnessed an increase in USD buying interest on Friday, though spot still trades the 163 level predominantly. The pair traded within a 60 points band with a strong resistance at 164.10/20 as traders remained cautious above 164, given the expected dollar sales from the state owned oil company which should push spot a tad lower in the next few days. The pair closed with slight depreciation relative to previous level at 163.95/05.

EUROPE: Euro zone countries are experiencing a recovery but lower interest rates may be needed to nurture it, European Central Bank executive board member Benoit Coeure stated on Friday. Coeure stated that the markets anticipate an economic recovery. Additionally, he stated that that the recovery has already arrived, but that it is gradual and fragile.

CHINA: China will probably need to ease monetary policy for the first time in two years in coming months to prevent the economy from losing too much momentum, according to economists who doubt the “mini stimulus” announced so far this year can do the job. Beijing has fast-tracked spending on railways and other projects in the country’s poorer regions and also cut taxes for small businesses, in what looks like a carbon copy of the fine-tuning that helped the economy tide over a soft patch last year.

Macro Economic Indicators
Inflation rate (yoy) for Feb. 2014        7.7%
Monetary Policy Rate current              12%
FX Reserves (Bn $) as at Apr. 3       37.866

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                     0.1525
USD 2 Months                   0.1913
USD 3 Months                   0.2296
USD 6 Months                   0.3275
USD 12 Months                  0.5556

Benchmark Yields
Tenor           Maturity           Yield

91d                  03-Jul-14             12.93
182d               04-Dec-14             13.26
364d               05-Mar-15            13.88
2y                    23-Apr-15             13.44
4y                    31-Aug-17             12.87
5y                    30-May-18            12.91

Indicative Currency Exchange Rates
Bid           Offer

EURUSD        1.3665          1.3767
GBPUSD         1.6520         1.6622
USDJPY          103.105       103.135
USDCHF         0.8858        0.8962
GBPEUR         1.1931          1.2033
USDZAR         10.4460      10.6520
USDNGN        163.65         164.35
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   164.10/20   163.52/62   163.95/05   163.78/88

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