A Review of the Nigerian Energy Industry

Financial market update

Financial markets08 April 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria plans to reweight its inflation index to 2009 by the end of the year, from 2004, to reflect the impact of non-food items on prices more accurately, Yemi Kale, the head of the Nigeria Bureau of Statistics (NBS) said on Monday. Nigeria rebased its GDP on Sunday for the first time in 24 years, valuing it at $509.9 billion and enabling it to surpass South Africa as Africa’s biggest economy. Kale said Nigeria would also reweight the inflation index to take into account the growing middle class with rising incomes. Bringing the GDP base year to 2010, from 1990, helped it capture changes in the economy including the rise of mobile phones and Internet. The inflation reweighting will be less dramatic, but previous moves have reduced inflation estimates.

FIXED INCOME: Muted reaction in the fixed income space to the substantial upward revision in the Country’s GDP. Mixed performance in the Bond space as the mild sell off on the short to mid tenor papers were offset by the mild demand momentum on the long end of the curve taking average yields just a little higher by 1bps to 13.54%. Despite the absence of an OMO auction yesterday, trading in the T-bills market remained mixed, with no clear direction on yields. The 10 DTM (17th April) paper came under the greatest buy pressure having seen its yield compressed further by 26bps to close at 11.54%. T-Bills primary market auction on Wednesday and this is expected to drive the T-bill market this week. O/N and OBB rate remained at 10.75% and 10.50% respectively as liquidity levels remain in excess of NGN400 billion.

COMMODITIES: West Texas Intermediate crude rebounded amid speculation gasoline supplies dropped for a seventh week in the U.S., the world’s biggest oil consumer. WTI for May delivery climbed as much as 62 cents to $101.06 a barrel in electronic trading on the New York Mercantile Exchange.

FX: Lacklustre trading day with the pair trading very tightly – within a 30 points range – on a relatively quiet day as the newly released rebased GDP result didn’t have an immediate effect on the currency. The pair opened and closed around the previous closing level as flows were well matched.

CBN RDAS AUCTION: CBN offered $400 million and sold $322.01 million at yesterday’s RDAS auction. Marginal rate was maintained at 155.74 (1% commission excluded) from previous auction.

US: U.S. consumer credit rose more than expected in February, likely reflecting a surge in demand for student and automobile loans. Total consumer credit increased by $16.49 billion to $3.13 trillion, the Federal Reserve said on Monday. January’s consumer credit figure was revised to show a $13.80 billion increase instead of the previously reported $13.70 billion gain.

EUROPE: The president of the German central bank warned on Monday that the credibility of the euro zone’s budgetary rules was at stake and that France’s suggestion that the bloc’s budget deficit targets be weakened are a “test case” for the rules.

Macro Economic Indicators
Inflation rate (yoy) for Feb. 2014       7.7%
Monetary Policy Rate current             12%
FX Reserves (Bn $) as at Apr. 4      37.952

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             0.1925
USD 3 Months             0.2294
USD 6 Months             0.3265
USD 12 Months           0.5521

Benchmark Yields
Tenor         Maturity         Yield
91d               03-Jul-14           12.81
182d             04-Dec-14          13.24
364d            05-Mar-15          13.86
2y                 23-Apr-15           13.38
4y                 31-Aug-17            12.87
5y                 30-May-18          12.94

Indicative Currency Exchange Rates
Bid          Offer

EURUSD      1.3694        1.3795
GBPUSD      1.6578         1.668
USDJPY       102.825       102.845
USDCHF      0.8822        0.8926
GBPEUR      1.1931           1.2033
USDZAR      10.3807        10.5865
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   164.06/16   163.75/85    163.90/00   163.95/05

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