A Review of the Nigerian Energy Industry

Financial market update

Financial markets 129 April 2014, Sweetcrude, Houston, Texas – Local and international financial market products and services update.
NIGERIA: The nation’s external reserves gained another $180 million dollars last week rising to $38.10 billion at the close of business on Thursday. According to the data published by the Central Bank of Nigeria (CBN) on its website, the external reserves rose from $37.92 billion on Thursday April 17th to $38.10 billion last week Thursday. The reserves had been rising since April 4th, when it recorded the last decline for the year. It rose by $230 million between April 4th and April 24th.

FIXED INCOME: Yesterday’s bond market session closed broadly unchanged. Most of the activity seen in the fixed income market yesterday was in the tbill space even though average yields closed marginally tighter by 10bps. The new 1-year bill (23 Apr 2015) started trading yesterday – closing at 13.29% yield (stop rate at the PMA was 13.9535%). The 1-year space remains well supported in the secondary market. The robust system liquidity favoured the July bills with the 17- July bill recording the highest gain as its yield compressed 37bps. Market expectation is to see the apex bank likely announce another OMO auction to mop up the surplus in the market.

COMMODITIES: West Texas Intermediate climbed in New York. WTI for June delivery rose 31 cents to $101.15 a barrel in electronic trading on the New York Mercantile Exchange.

FX: Quiet trading session for the Naira yesterday; we saw very few flows go through the market. We opened at 160.85/95 and moved for the 161.20 level; however we fell short and closed a tad lower at 161.00/10. We maintain our bias for bigger downside risk short term, expecting the 161.20 resistance level to hold, after that 161.50.

CBN RDAS AUCTION: CBN offered $400 million and sold $399.65 million at yesterday’s RDAS auction. Marginal rate was maintained at 155.73(1% commission excluded) from the previous auction. 23 banks participated.

US: Federal Reserve policymakers this week are set to continue paring their massive bond-buying stimulus, but below the smooth surface of a likely unanimous vote lies a deeply divided Fed struggling to lay the groundwork for more difficult decisions ahead. Fed Chair Janet Yellen hinted at the U.S. central bank’s broad agenda a couple weeks ago when she laid out three “big” issues officials need to track: the level of slack in the labor market, whether inflation is rising back toward the Fed’s 2 percent goal, and the factors that could derail the economic recovery.

EUROPE: Britain’s economy is likely to have come within a whisker of finally recovering its pre-recession size when data is released on Tuesday, buoying Prime Minister David Cameron little more than a year before a national election. Gross domestic product figures, are also likely to show Britain notched up its fastest economic growth in nearly four years in the first three months of 2014. Britain’s economy has bounced back strongly over the past 12 months and is it expected to grow more quickly than any other Group of Seven nation this year.

Macro Economic Indicators
Inflation rate (yoy) for Mar. 2014           7.8%
Monetary Policy Rate current                  12%
FX Reserves (Bn $) as at Apr. 24           38.102

Money Market Highlights

O/N                         10.5167
30 Day                     12.8368
90 Day                    13.8098
180 Day                  14.5402
USD 1 Month         0.1503
USD 2 Months       0.1901
USD 3 Months       0.2249
USD 6 Months       0.3264
USD 12 Months     0.5495

Benchmark Yields
Tenor          Maturity           Yield

91d                31-Jul-14               10.93
182d             09-Oct-14               11.18
364d             23-Apr-14              12.73
2y                  16-Aug-14              12.68
4y                  31-Aug-17              12.55
5y                  29-Jun-14              12.70

Indicative Currency Exchange Rates
Bid            Offer

EURUSD       1.3815            1.3917
GBPUSD        1.6752            1.6855
USDJPY         102.625         102.655
USDCHF        0.8745           0.8847
GBPEUR         1.1931            1.2033
USDZAR         10.4900        10.6960
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
 161.05/15    160.85/95      161.00/10       160.80/90

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