A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets 110 June 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
FX: The Naira opened weaker on Monday as it traded as high as N163.45 but retraced when the news of the state owned oil company (NNPC) would sell dollars, usually around $350m – $400m. Naira eventually closed stronger at N162.60 with most players going oversold dollars in anticipation of the inflows. Most players expect the inflows to hit the market today and that should in turn strengthen the currency.

RDAS: CBN sold $292.6m from an offer of $300m at N155.73 (Less the 1% commission).

FIXED INCOME: Market retraced after an initial sell-off in reaction to the statement made by the new CBN governor clarifying his earlier statement with reference to lower yields. The initial sell-off was led mainly by traders creating intra-day short positions that they had to close before close of trading. There was also some slight interest at these levels mainly from local PFAs and sparse offshore flows. We expect the market to continue sell-off slightly today though very mildly as players position for the bond auction on Wednesday. Treasury bills yield inched up by 6bp as at close of trading today.

NIGERIA: Nigeria plans to amend investment rules to channel more of the country’s $26 billion of pension funds into corporate bonds, Nigeria Pension Commission Director-General Chinelo Anohu-Amazu said. New rules are being considered to encourage more investments in corporate bonds, thereby making long-term capital available to fund infrastructure projects.
Nigeria is seeking buyers for the assets of distressed state-owned former telecom monopoly NITEL. It said bids must be submitted by 1600 GMT on June 30, adding that the assets would be handed over to the preferred bidder in December.

COMMODITY: West Texas intermediate and Brent crude advanced on signs of stronger global economic growth and concern that political tension in Libya will disrupt supplies. WTI and Brent advanced as much as 1.30%.
China’s exports rose more than analysts estimated in May, customs administration data showed yesterday.

US: U.S. stocks extended all-time highs as small caps rallied amid deals activity, while Treasuries fell to the least expensive level in four years versus their Group of Seven peers. Oil jumped and corn prices slumped. The Standard & Poor’s 500 Index gained 0.2 percent as of12:17 p.m. in New York, after closing at an all-time high on June 6. The yield on 10-year Treasuries rose two basis points to 2.61 percent. Apple Inc. traded at $93.15, reflecting a seven-for-one stock split.

INDIA: India’s rupee ended three days of gains on speculation the central bank is intervening to prevent a stronger currency from hurting a revival in the economy. The currency retreated after touching a one-week high as state-owned lenders may have bought dollars on behalf of the Reserve Bank of India, The rupee has rallied 4.4 percent against the dollar this year as global funds stepped up purchases of local bonds and stocks.

Macro Economic Indicators
Inflation rate (Y-o-Y) for Apr. 2014              7.90%
Monetary Policy Rate current                         12.00%
FX Reserves (Bln $) as at Jun.                        6 36.82

Money Market Highlights

O/N                               10.9167
30 Day                           11.6479
90 Day                           12.9988
180 Day                         14.0097
USD 1 Month                0.1523
USD 2 Months             0.1918
USD 3 Months             0.2306
USD 6 Months             0.3214
USD 12 Months            0.5351

Benchmark Yields
Tenor             Maturity             Yield
91d                    04-Sep-14               10.85
182d                  04-Dec-14              11.38
364d                 07-May-15              12.67
2y                      16-Aug-16               11.34
3y                      31-Aug-17                11.49
5y                      29-Jun-19                11.67

Indicative Currency Exchange Rates
                            Bid              Offer
EURUSD          1.3490            1.3699
GBPUSD           1.6700            1.6902
USDJPY            102.30            102.36
USDCHF           0.8915            0.9020
GBPEUR           1.2255             1.2460
USDZAR           10.5800          10.7900
USDNGN          162.35             163.05
JPYNGN            1.539               1.641
CHFNGN          180.5               182.3

                              Hi                  Low             Close      Prev.Close
USD/NGN   163.40/50       162.35/45      162.55/65   162.70/80

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