A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets05 June 2014, Sweetcrude, Houston, Tx – Local and international financial market products and services update.
NIGERIA: Emefiele, new CBN Governor, to unveil plans on Thursday: Godwin Emefiele, the new Governor of Central Bank of Nigeria (CBN), will on Thursday unveil the new strategies to be adopted by the bank under his leadership. The new CBN governor is expected to have a maiden World Press Conference on Thursday, June 5, where he will unveil his agenda for the Central Bank of Nigeria and the people of Nigeria.

FIXED INCOME: The market opened on a dovish note with a mild sell-off on the short end of the curve. Treasury bill yields remained rather stable as market awaited the outcome of the primary auction. Local pension funds and offshore players have been quite cautious at these current levels. Flows have been relatively thinner this week compared to last week. The results of the T-Bills primary auction showed some weakness as yields increased an average of 30bps from the last auction. This might weaken rates today in the secondary market in reaction to this outcome.

FX: The Naira experienced a bit of pressure yesterday as we saw little or no oil flows in the market to ease the constant demand. Players still showing caution in buying USD at these levels as they expect the state owned oil company flows to hit the market soon (Usually between $400m – $500m). Naira weakened to close at N162.65.

CBN RDAS AUCTION: CBN offered another $300 million on Wednesday at their bi-weekly RDAS auction and sold $244.99 million at a marginal rate of 155.73 (1% commission excluded). 22 banks participated.

US: Dollar volatility surged to the highest in a year versus the euro and price swings in treasuries rose to a two-month high as economists predicted the European central bank will cut its deposit rate to below zero today.

India’s rupee erased gains on speculation the central bank intervened to rein in an advance that’s made the currency the best performing in Asia this year after Pakistan’s rupee. The currency was little changed at 59.2865 to a dollar as of 11:44 a.m. in Mumbai, after rising as much as 0.2% to 59.2275, according to prices from local banks, from news sources. The rupee has appreciated 4.2 percent this year, compared with the 6.9 percent advance in Pakistan’s currency. The Reserve Bank of India stepped up dollar purchases, according to Admisi Forex India Pvt. Foreign-exchange reserves in India rose above $300 billion in 2014 for the first time since 2011 as the new government under Narendra Modi prepares to announce its inaugural budget next month, although an exact date hasn’t been formalized.

COMMODOTIES; West Texas Intermediate fell for a second day as crude stockpiles remained near record-high levels amid declining fuel demand in the U.S., the world’s biggest oil consumer. Brent decreased in London. Futures dropped as much as 0.4 percent in New York. Crude supplies shrank by 3.43 million barrels to 389.5 million last week, the Energy Information Administration reported yesterday.

Macro Economic Indicators
Inflation rate (yoy) for Apr. 2014              7.90%
Monetary Policy Rate current                    12.00%
FX Reserves (Bn $) as at Jun. 2                 36.81

Money Market Highlights

O/N                               10.9167
30 Day                          12.6014
90 Day                          13.6103
180 Day                        14.4638
USD 1 Month                0.1520
USD 2 Months              0.1918
USD 3 Months              0.2295
USD 6 Months              0.3219
USD 12 Months             0.5340

Benchmark Yields
Tenor            Maturity          Yield

91d                  04-Sep-14            10.41
182d                04-Dec-14           10.98
364d               07-May-15           11.51
2y                    16-Aug-16            11.63
3y                    31-Aug-17            11.73
5y                    29-Jun-19           12.02

Indicative Currency Exchange Rates
Bid           Offer

EURUSD         1.3508        1.3666
GBPUSD         1.6707         1.6861
USDJPY          102.33         102.74
USDCHF         0.8938        0.9059
GBPEUR         1.2213          1.2376
USDZAR         10.5464      10.7636
USDNGN        161.95         162.95
JPYNGN         1.5708         1.7208
CHFNGN        180.72         182.72
EURNGN        220.50        221.80
GBPNGN         271.78        273.78
ZARNGN         14.52          18.52

                               Hi             Low           Close       Prev.Close
USD/NGN   162.73/83    162.40/50   162.62/72   162.42/52

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