A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets 104 August 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Stakeholders in the built environment and finance sectors have called for upward review of the capital base of Federal Mortgage Bank of Nigeria (FMBN) from the current N2.5 billion to N500 billion. While making inputs into the three bills for the ‘Re-establishment of FMBN and its board of directors’; ‘Repeal and establish the National Housing Fund Trust’ and ‘amend Federal Land Registry (Miscellaneous Provisions) Act ’, Tunde Lasakin, president, Nigerian Institute of Building, recommended the sum of N500 billion as recapitalisation for FMBN. Other stakeholders who supported the move to reposition mortgage system in the country include Real Estate Developers Association of Nigeria (REDAN), Nigeria Labour Congress (NLC) as well as primary mortgage institutions (PMIs) and commercial banks.

FX: Buoyed by more sales by two oil companies, estimated to be over $100 million, the pair ended the week with a lot of USD sales, closing at its strongest level in about 12 weeks at 161.35/45, as we continue to see very light USD appetite in the market. Market opened at 161.65/75, opening about 20 points lower than previous close over news of the USD liquidity boost from the oil sales, a testament of the relatively low level of demand.

FIXED INCOME: First day in August has come and gone and not much change in sentiment or market dynamics. Tbill and bond market saw a few buyers on Friday, with the 30 October bills being the star performer (down 21bps). Not expecting much from market today, apart from a general feeling of weakness as street makes room for the tbill auction. Even with NGN300bn of 7 aug 2014 bills maturing on Thursday, street will be waiting for an OMO auction which based on current market condition pretty much gives the best yield – around the range of 11.25% yield.

COMMODITIES: West Texas Intermediate crude traded near the lowest price in six months before data that will signal the strength of the economy in the U.S., the world’s biggest oil consumer. WTI for September delivery was at $98.10 a barrel in electronic trading on the New York Mercantile Exchange, up 22 cents.

USA: U.S. job growth slowed a bit in July and the unemployment rate unexpectedly rose, pointing to slack in the labour market that could give the Federal Reserve room to keep interest rates low for a while. Nonfarm payrolls increased 209,000 last month after surging by 298,000 in June, the Labour Department said on Friday. Economists had expected a 233,000 job gain.

CHINA: Growth in China’s services sector slipped to a six-month low in July as new orders rose at their weakest rate in at least a year, data showed, taking some of the shine off an industry that has been a bright spot in the Chinese economy this year.The official Purchasing Managers’ Index (PMI) for the non-manufacturing sector slowed to 54.2 in July from June’s 55, the National Bureau of Statistics said on Sunday. That is the weakest reading since January.

Macro Economic Indicators
Inflation rate (YoY) for June. 2014                  8.20%
Monetary Policy Rate current                          12.00%
FX Reserves (Bn $) as at July 24th 2014       38.942

Money Market Highlights

O/N                                   11.4167
30 Day                              12.8859
90 Day                              13.7870
180 Day                            14.5554
USD 1 Month                 0.1560
USD 2 Months               0.1978
USD 3 Months               0.2381
USD 6 Months               0.3344
USD 12 Months             0.5781

Benchmark Yields
Tenor                 Maturity               Yield

91d                        23-Oct-14                 10.87
182d                     22-Jan-15                  10.62
364d                     07-May-15                 10.70
2y                          16-Aug-16                  11.16
3y                          31-Aug-17                  11.09
5y                          29-Jun-19                  11.35

Indicative Currency Exchange Rates
Bid          Offer

USDNGN          161.10       161.80
EURUSD           1.3324      1.3526
GBPUSD           1 .6725      1.6927
USDJPY            102.62      102.63
USDCHF           0.9011      0.9113
GBPEUR           1.2432      1.2635
USDZAR           10.5795    10.7835
JPYNGN           1.5228      1.6238
CHFNGN          177.33      179.00
EURNGN         216.06      217.43
GBPNGN          270.96      272.36
ZARNGN           14.21        16.02

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