A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets08 August 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The bilateral trade between the United States of America and Nigeria has risen to $36 billion annually, President Goodluck Jonathan said. The president, who disclosed this late Wednesday in Washington DC., also called for more US investment in Nigeria. According to him, the bilateral trade would continue to appreciate with greater cooperation between Nigeria and its allies in the United States government, as well as the private sector.

FIXED INCOME: Weak open yesterday as expected but it never really sold off to start with. We started seeing players being better buyers of 7 – 42 day paper in the tbill market. All in all, market was fairly active for a post auction trading day. There were Light flows in the bond market yesterday with yields closing marginally higher. Market liquidity was in the range of NGN300-400billion with O/N rates at 10.25%.

FX: There was further pressure on the pair yesterday as Wednesday’s sentiments were carried over, giving NGN its weakest close in about 5 weeks. Market opened at 161.60/70. We are seeing a considerable surge in paying interest, a fallout of the renewed parallel market activity as Central Bank finally ratifies the parallel market dealers that met the newly introduced capital requirements. Thus, we’ve seen a reversal in recent gains for NGN; we closed at 162.58/68.

USA: The Federal Reserve bought $7.648 billion of agency mortgage-backed securities in the week from July 31 to Aug 6, more than the $7.205 billion purchased the previous week, the New York Federal Reserve Bank said on Thursday. In a move to help the housing market begun in October 2011, the U.S. central bank has been using funds from principal payments on the agency debt and agency mortgage-backed securities, or MBS, it holds to reinvest in agency MBS.

COMMODITIES: WTI reached a six-month low in intraday trading on speculation that falling US refinery utilization rates will reduce crude demand. WTI for September delivery gained 42 cents, or 0.4%, to settle at $97.34/bbl on the New York Mercantile Exchange. It touched $96.55 earlier, the lowest intraday price since Feb. 4.

China’s buoyant exports pushed its trade surplus to a record in July, fuelling optimism global demand will help counter pressure on the domestic economy from a weakening property sector. While manufacturing appears to have picked up in the world’s second-largest economy, unexpected weakness in the services sector this week has renewed concerns about the growth outlook. The weak housing market remains China’s biggest risk, posing a drag on the broader economy and investor confidence.

Macro Economic Indicators
Inflation rate (YoY) for June. 2014                    8.20%
Monetary Policy Rate current                            12.00%
FX Reserves (Bn $) as at August 06th 2014   39.367

Money Market Highlights

O/N                          10.9583
30 Day                     12.7678
90 Day                     13.4520
180 Day                   14.2019
USD 1 Month          0.1588
USD 2 Months        0.1941
USD 3 Months        0.2342
USD 6 Months        0.3283
USD 12 Months      0.5559

Benchmark Yields
Tenor        Maturity        Yield

91d              06-Nov-14         10.52
182d            05-Feb-15          10.91
364d           07-May-15         10.91
2y                16-Aug-16          11.17
3y                31-Aug-17          11.07
5y                29-Jun-19          11.32

Indicative Currency exchange Rates
Bid         Offer

USDNGN       162.42       163.12
EURUSD       1.3285        1.3487
GBPUSD       1.6707         1.6909
USDJPY        101.71         101.74
USDCHF       0.9014        0.9116
GBPEUR       1.2455         1.2658
USDZAR       10.6999       10.9070
JPYNGN       1.5498          1.6505
CHFNGN      178.72           180.39
EURNGN      217.20          218.57
GBPNGN       272.88         274.28
ZARNGN       14.17            15.97

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