A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets 113 August 2014, Sweetcrude, Lagos – Local and international financial markets products and services update.
FX: Tuesday had NGN sustaining Monday’s bullish sentiments, buoyed by more USD inflow from an oil major. We opened 20bps lower than the previous day’s close on the back of the boost in USD liquidity in the market.
Slight gains at open had the pair trading the 161 level few minutes into open, but failed a break below 161.80. We eventually settled within a tight 161.95-162.10 range and closed at 162.02/12. The state owned oil company’s oil sale is yet to materialise, but it’s expected to eventually come in this week. This should help sustain the pair’s strengthening momentum this week.

FIXED INCOME: Better tone in the T-Bill markets on Tuesday though bond market still feels soggy – impact from the bond auction tomorrow with NGN100bn on offer. New 1 year bill (6 AUG 2015) listed today holding steady at 11.34% yield. O/N rates unchanged at 10.65%. Recent OMO bills (25 DEC 14 and 27 NOV 14) well supported as they offer decent yields as compared to the rest of the curve. Saw decent size being offered at 11.13% yield. All in all, another day again for the bears.

NIGERIA: Cocoa prices received by farmers in Africa’s largest economy declined as mould induced by heavy rains reduced the quality of the chocolate ingredient, said Socodevi, an organization working on improving crops in Nigeria.Farmgate prices in the Cross River belt dropped 8% to 440,000 naira ($2,714) a metric ton, compared with 480,000 naira at the end of July, Neji Abang, country coordinator for Socodevi, a Quebec City, Canada-based organization, said in a telephone interview today from Ikom in Cross River state.

USA: U.S. stocks fell, after the Standard & Poor’s 500 Index produced its biggest two-day gain since April, as investors watched geopolitical developments and energy shares sank after Brent crude reached a nine-month low.

The S&P 500 fell 0.3 percent to 1,930.24 at 11:04 a.m. in New York. The Dow Jones Industrial Average slipped 43.83 points to 16,526.15 today. Trading in S&P 500 stocks was 27 percent below the 30-day average at this time of day

COMMODITIES: Brent crude fell to the lowest in nine months as the International Energy Agency said a supply glut was shielding the market against threats in the Middle East. West Texas Intermediate also declined.

Brent dropped for a third day.

CHINA: Hong Kong is luring an inflow of funds as investors grow more optimistic about China’s economy and buy mainland-related shares, the city’s central bank said.

The inflow is boosting demand for the Hong Kong dollar after companies bought the currency in July for dividend payments and mergers and acquisitions, Hong Kong Monetary Authority Chief Executive Norman Chan said yesterday.

Macro Economic Indicators

Inflation rate (YoY) for June. 2014                      8.20%
Monetary Policy Rate current                              12.00%
FX Reserves (Bn $) as at August 08th 2014     39.440

Money Market Highlights

O/N                              10.9167
30 Day                         12.7801
90 Day                         13.6406
180 Day                       14.4785
USD 1 Month              0.1560
USD 2 Months           0.1960
USD 3 Months           0.2331
USD 6 Months           0.3289
USD 12 Months         0.5553

Benchmark Yields
Tenor             Maturity         Yield

91d                    13-Nov-14         11.21
182d                  19-Feb-15         11.62
364d                 07-May-15        12.65
2y                      16-Aug-16         11.15
3y                      27-Apr-17          11.09
5y                      29-Jun-19         11.32

Indicative Currency Exchange Rates
Bid           Offer

USDNGN    161.90         162.00
EURUSD     1.3252         1.3454
GBPUSD     1.6724         1.6926
USDJPY      102.44         102.47
USDCHF     0.9040        0.9141
GBPEUR     1.2498         1.2702
USDZAR     10.5260      10.7315
JPYNGN     1.5304         1.6311
CHFNGN    177.31         179.00
EURNGN    215.57         216.93
GBPNGN     271.78        273.18
ZARNGN       14.34        16.14

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