A Review of the Nigerian Energy Industry

Financial market products & services update

Financial-market27 May 2014, Sweetcrude, Houston, Tx: Local and international financial market products and services update.
NIGERIA: In its commitment to boost gas processing in Nigeria, the Federal Government yesterday, said it had put machinery in place to construct the first and largest multi-billion dollar gas industrial park in Africa. Making this disclosure at the opening of a three-day National Conference and Exhibition on Gas Resources, organised by the Senate Committee on Gas in Abuja, the Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke, said the park would be sited in Delta State. Alison-Madueke, who was represented at the occasion by the Group Managing Director of the Nigerian National Petroleum Corporation, Mr. Andrew Yakubu, added that the proposed park would consist of other industries which would produce items such as fertilizers, petrochemical, methanol, and other related products.

FIXED INCOME: Retracement of Thursday’s rally in the bonds market spilled over to Friday, especially in the 2y and 3y bonds which sold off by 45bps shortly after open and about 15- 20bps in the longer tenors. Calm was restored before close as we began to see some interest in the market at those levels. The short end (t-bills) was relatively quiet, still slight selling in the 3m space while flows in other maturities were well matched. We expect continued reluctance to hold bills below the 10% yield level as the market anticipate another OMO auction by the Central bank this week to mop up liquidity from the maturing bill (approximately N310billion).

COMMODITIES: West Texas Intermediate traded near the highest price in more than four weeks before data that may signal the strength of the economy in the U.S., the world’s biggest oil consumer. WTI for July delivery was at $104.50 a barrel in electronic trading on the New York Mercantile Exchange, up 15 cents.

FX: There were oil companies in the market yesterday – the estimated amount sold was about $70 million. This offered no succour to the pair as we still traded last week’s levels of 162.30/40. More oil companies are expected this week.

CBN RDAS AUCTION: CBN offered $400 million and sold $365.15 million at yesterday’s RDAS auction. Marginal rate still maintained at 155.73 (1% commission excluded). 20 banks participated.

EUROPE: European Union leaders north and south of the economic divide are channeling an anti-austerity electoral backlash as they seek to push the case for an easing of fiscal policy throughout the euro zone. Italian Prime Minister Matteo Renzi’s victory and French President Francois Hollande’s defeat in the European elections united them in seizing on the results to press for an overhaul of the EU’s German-backed budget-cutting model that has held sway since the debt crisis erupted more than four years ago.

CHINA: China’s benchmark money-market rate fell the most in three weeks after Premier Li Keqiang signaled more policy easing to counter an economic slowdown and the central bank stepped up fund injections. Premier Li said the downturn pressure in China’s economy is “relatively large” and the nation will fine-tune policies when needed to solve problems such as financing difficulties for small companies, according to a statement on the government’s website on May 23. The People’s Bank of China added a net 120 billion Yuan ($19.2 billion) to the financial system last week, the most in four months, to boost cash supplies as lenders park corporate tax collections at the central bank.

Macro economic Indicators
Inflation rate (yoy) for Apr. 2014        7.9%
Monetary Policy Rate current              12%
FX Reserves (Bn $) as at May. 23       37.315

Money Market Highlights

O/N                                11.0417
30 Day                           12.7082
90 Day                           13.5490
180 Day                         14.4727
USD 1 Month                0.1505
USD 2 Months              0.1925
USD 3 Months              0.2294
USD 6 Months              0.3239
USD 12 Months            0.5354

Benchmark Yields
Tenor          Maturity        Yield

91d                 21-Aug-14        10.21
182d              20-Nov-14       10.60
364d              07-May-15       11.11
2y                   16-Aug-16        11.63
4y                   31-Aug-17        11.64
5y                   29-Jun-19        11.90

Indicative Currency Exchange Rates
Bid           Offer

EURUSD             1.3594       1.3696
GBPUSD              1.6812       1.6915
USDJPY               101.81       101.84
USDCHF              0.8901     0.9003
GBPEUR              1.1931       1.2033
USDZAR             10.2937    10.5018
USDNGN             162.05      162.75
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
 162.35/45   162.10/20   162.35/45   162.30/30

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