A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets11 June 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Asset Management Corporation of Nigeria, set up by the West African nation to buy bad debts from banks, said it plans to repay 800 billion naira ($4.9 billion) of bonds due August this year. That leaves 3.8 trillion naira of remaining debt after 1 trillion naira was redeemed last year.

FX: We opened to anticipation of significant USD sales by the state owned oil company, igniting an initial drop in rates. NGN traded a low of 161.95/05 from a 162.50/60 open few minutes into trading, but we retraced almost immediately, with a reversal in sentiment seen by mid-day owing to the oil company sales not materializing. The payers ensured the pair traded the 163 level, but failing a break of intraday resistance at 163.60/70 as a late boost in USD liquidity from a few counters pushed rates south sub 163 to a 162.75/85 close. The flow from the state owned Oil Company is still expected this week and this should help cap NGN at 163.50-80. We have our support at 161.40-60

FIXED INCOME: Market opened on a strong bullish note in the first hour of trading before prices stabilised and remained stable till close. The buying sentiment was largely on the back of tomorrow’s auction for 2016s & 2022s. Some players took advantage of today’s price rise to lock profits and to cut positions. At current market yields on FGN bonds, most local banks are neutral on long duration bonds and quite cautious on short duration. The outcome of the auction will give direction to where yields are headed in the coming week.

West Texas Intermediate crude rose to a three-month high amid forecasts that U.S. stockpiles dropped a second week. Brent fell after Ukraine said talks with Russia yielded progress. WTI breached $105 for the first time since March. Crude supplies probably fell by 1.5 million barrels last week.

US: U.S. stocks slipped after a four-day rally, while the yen gained and emerging-market shares advanced. Palladium reached a three-year high as strike talks in South Africa failed. Treasuries and most European bonds fell.The Standard & Poor’s 500 Index lost 0.1 percent at 2:30 p.m. in New York. The Stoxx Europe 600 Index added 0.3 percent to close at a six-year high. The MSCI Emerging Markets Index added 0.7 percent to reach a 13-month high.

CHINA: China’s inflation accelerated in May to the fastest pace in four months on food costs, while a decline in factory-gate prices moderated.
Consumer prices rose 2.5 percent from a year earlier, the statistics bureau said today in Beijing. That exceeded the median 2.4 percent estimate in a Bloomberg News survey of economists. The producer-price index fell 1.4 percent after a 2 percent decline the previous month.

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

Money Market Highlights

O/N                             10.9167
30 Day                        11.6556
90 Day                        13.1083
180 Day                      14.0403
USD 1 Month             0.1520
USD 2 Months           0.1918
USD 3 Months           0.2303
USD 6 Months           0.3214
USD 12 Months         0.5366

Benchmark Yields
Tenor          Maturity         Yield

91d                 11-Sep-14           11.06
182d              04-Dec-14          11.37
364d              07-May-15         12.48
2y                   16-Aug-16          11.20
4y                   31-Aug-17          11.29
5y                   29-Jun-19          11.51

Indicative Currency Exchange Rates
Bid         Offer

EURUSD      1.3440        1.3644
GBPUSD       1.6655        1.6859
USDJPY        101.27        102.98
USDCHF       0.8897      0.9000
GBPEUR       1.2276        1.2478
USDZAR        10.6625     10.7815
USDNGN       161.55       163.85
JPYNGN        1.5711         1.7923
CHFNGN       179.83       182.98
EURNGN       219.30      22180
GBPNGN        271.60      277.90
ZARNGN        14.80        18.10

Hi            Low           Close         Prev.Close
     163.60/70 161.95/05     162.75/85    162.55/65

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