A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets 125 July 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
FX: Another quiet session for the pair as NGN remain relatively stable during the trading period yesterday. Slight inflow (about $20 mio) from oil major and a relatively low level of demand eventually had us trading sub 162 towards close. The pair closed unchanged from previous level. The approaching month-end and its characteristic surge in oil major sales should further support the pair, with spot expected to eventually settle at the 161 level in the short term.

FIXED INCOME: Market was relatively active, with pockets of demand across the yield curve, with the tbills dropping about 5bps and bonds did a marginal 2bps. CBN had come out yesterday morning to issue a 126day OMO bill (27/11/2014 maturity), but was later cancelled the auction, no explanation have been given yet, but we expect that them to return soon with the auction.”

COMMODITIES: WTI headed for the third weekly decline this month amid speculation that rising U.S. gasoline stockpiles signal reduced demand in the world’s biggest oil consumer. Brent was steady in London. Futures were little changed in New York after falling 1 percent yesterday. Gasoline inventories climbed to the highest level since March, while crude supplies dropped for a fourth week, Energy Information Administration data showed on July 23. WTI for September delivery was at $102.03 a barrel in electronic trading on the New York Mercantile Exchange, down 4 cents at 8:42 a.m. London time.

NIGERIA: The CBN yesterday signed a Memorandum of Understanding, MoU, with the 36 state governors for a N220 billion micro and macro development fund for the Small Scale Enterprises, SMEs, across the country. The scheme is to fast-track the actualization of the Millennium Development Goals and transformation agenda of the federal government. In his opening remarks, the CBN Governor, Mr. Emefiele, said the initiative was considered necessary to enable federal government bridge the socio-economic gap existing in the country. Emefiele said the micro economic scheme was globally recognized as means of economic growth, income generation, job creation and poverty reduction.

US: Treasuries declined, with 10-year yields rising for a second day, as a report showed U.S. jobless claims unexpectedly fell to the lowest level in more than eight years, damping demand for the safest assets. The benchmark 10-year yield climbed from almost the lowest since May as investors assess the Federal Reserve’s plans to raise interest rates next year. Reports indicated euro-area manufacturing and services grew while a gauge of Chinese factory activity rose to an 18-month high in July.

CHINA: China’s stocks rose, capping the benchmark index’s biggest weekly gain in three months, as material producers rallied and money-market rates declined. “There’s a consensus that China’s economy can stabilize and the market is confident about the outlook,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. in Shanghai, which oversees about $193 million.

Macro Economic Indicators
Inflation rate (YoY) for June. 2014              8.20%
Monetary Policy Rate current                       12.00%
FX Reserves (Bn $) as at July 18th 2014    38.490

Money Market Highlights

O/N                                 10.9167
30 Day                            12.0737
90 Day                            13.0906
180 Day                          14.1450
USD 1 Month                  0.1542
USD 2 Months                0.1975
USD 3 Months                0.2351
USD 6 Months                0.3291
USD 12 Months              0.5571

Benchmark Yield
Tenor           Maturity          Yield

91d                  09-Oct-14           10.88
182d                22-Jan-15           11.28
364d               07-May-15          11.72
2y                    16-Aug-16           10.89
4y                    31-Aug-17           10.83
5y                    29-Jun-19           11.06

Indicative Currency Exchange Rates
                             Bid          Offer
USDNGN          161.83         162.53
EURUSD           1.3357         1.3561
GBPUSD           1.6989        1.7192
USDJPY            101.38         101.40
USDCHF          0.8981        0.9082
GBPEUR          1.2595         1.2801
USDZAR        10.5954      10.8026
JPYNGN          1.5492        1.6501
CHFNGN         178.73        180.42
EURNGN         217.58        218.98
GBPNGN         276.46        277.88
ZARNGN           14.26         16.06

                              Hi                Low       Close         Prev.Close
USD/NGN     162.25/35   161.80/90   161.80/90   161.19/29

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