A Review of the Nigerian Energy Industry

Financial market update

Financial-markets25 April 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Trade and development experts on Thursday expressed fears that Nigeria may lose over $1.3 trillion if the government eventually ratifies the Economic Partnership Agreement (EPA), a trade accord framework with the European Union countries (EU), which it signed four months ago in Dakar, Senegal. The stakeholders were also apprehensive of the likely loss of investments and jobs that may arise from ratifying the agreement by the West African regional economic block, under the aegis of the Economic Community of West African States (ECOWAS).

FIXED INCOME: After three weeks of no OMO auction, the CBN conducted the first OMO auction offering NGN70billion on the 126DTM paper (28 Aug 20114) but selling NGN198bn at a stop rate of 12% with total subscription at NGN271.48 bn. With system liquidity hitting NGN1 trillion, demand in the tbill market is likely to be sustained barring the announcement of another OMO auction. Tbills are now trading at an average yield of 11.72% while bonds are at 13.20%. The 2024s resumed trading yesterday and closed at 13.22% bid and 13.16% offer.

COMMODITIES: West Texas Intermediate headed for the first weekly loss in three weeks. WTI for June delivery was at $101.66 a barrel in electronic trading on the New York Mercantile Exchange, down 28 cents.

FX: Another round of Oil company sales yesterday (approx $100) pushed previous day’s momentum even further as the pair traded to a low of 161.00; however, it failed to break below the figure and retraced to spend most of the day around 161.20-30. With more oil company sales expected to hit the market next week, this should take the pair sub 161 while seeing initial support around 160.60-70.

CHINA: China created 3.44 million new jobs in cities in the first three months of this year, bringing the urban jobless rate down slightly to 4.08 percent, the labor ministry said on Friday. The figure at the end of December was 4.1 percent and the slight drop could offer the latest evidence that the country’s job market was faring well despite a slowdown in the broader economy.

EUROPE: Standard & Poor’s on Friday affirmed France’s long-term credit rating at AA and its short-term credit rating at A-1+ with a stable outlook, citing the government’s efforts to improve the economy’s competitiveness and reduce the public deficit. The Socialist government on Wednesday signed off on a multi-year fiscal program that underscored its commitment to lower the public deficit to a European Union ceiling of 3 percent of gross domestic product by the end of next year.

Macro Economic Indicators
Inflation rate (yoy) for Mar. 2014      7.8%
Monetary Policy Rate current             12%
FX Reserves (Bn $) as at Apr. 23     38.083

Money Market Highlights

O/N                         10.9167
7 Day                       11.2500
30 Day                    12.7630
60 Day                    11.8333
90 Day                    13.6132
USD 1 Month         0.1518
USD 2 Months       0.1921
USD 3 Months       0.2279
USD 6 Months       0.3235
USD 12 Months     0.5495

Benchmark Yields
Tenor        Maturity         Yield

91d              24-Jul-14          11.13
182d           09-Oct-14          11.65
364d           09-Apr-15          13.26
2y               23-Apr-15          12.50
4y               31-Aug-17          12.50
5y               30-May-18        12.50

Indicative Currency Exchange Rates
Bid        Offer

EURUSD       1.3783      1.3885
GBPUSD       1.6752       1.6855
USDJPY        102.265    102.295
USDCHF       0.8762      0.8864
GBPEUR       1.1931       1.2033
USDZAR       10.5465    10.7523
USDNGN      160.70      161.40
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
   161.45/55   160/95/05   161.00/10   161.62/72

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