A Review of the Nigerian Energy Industry

Financial market products & services update

1Financial markets 14 August 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
FX: Another round of Oil company sales yesterday today pushed the previous momentum even further with the pair opening sub 162 and strengthening by 50bps intraday. The much anticipated inflow from the state owned oil major materialised in part yesterday, with more expected over the next few days. Estimated volume is between $300-$500 mio but impact is likely to be partly mitigated with few bids at the low 161 level as evidenced by yesterday’s price action. CBN sold $349.38 mio of the $350mio on offer at today’s RDAS. Marginal rate was maintained at 157.2873 (1% commission inclusive) and 24 banks participated at the auction.

FIXED INCOME: Similar themes in both bonds and tbills trading yesterday. Shorter dated paper doing relatively well – 21 Aug had a good run and longer dates less exciting for street. The market traded below average volumes yesterday as like most auction days majority of the bond market focusing on bond auction results to give some direction for the rest of the month. Liquidity in the system at approximately NGN180bn.

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.

NIGERIA: The Federal Government has secured over N44 billion funding support from the World Bank and the UK Department for International Development(DFID) to create 460,000 jobs across eight sectors of the economy under the Growth and Employment (GEM) project over the next six years (2013-2018). Ambassador Abdulkadir Musa, the Permanent Secretary, Federal Ministry of Industry, Trade and Investment, disclosed this during a programme for GEM Entertainment Cluster workshop held in Lagos. According to him, GEM is an employment project formulated by the ministry and supported by World Bank and the DFID. “The DFID has provided 90 million Euros (about N18.5billion) as grant and the World Bank $160 million (about N25.6 billion concessionary loans for the implementation of the project in Nigeria,” he stated.

USA: Treasuries rose, pushing 10-year yields toward a one-year low, as a report showing U.S. retail sales were little changed in July amid tepid wage growth added to signs the economy will struggle to gain momentum. The government auctioned $24 billion of 10-year notes at the lowest yield in more than a year.

CHINA: Business sentiment is deteriorating in China as dozens of foreign companies, including Germany’s three biggest luxury carmakers, are being targeted in the country’s broadest antitrust investigation since the nation’s anti-monopoly law went into effect six years ago. and General Motors Co.

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                          12.7519
90 Day                          13.6575
180 Day                        14.3659
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            11.29
182d                19-Feb-15            11.62
364d               07-May-15           12.65
2y                    16-Aug-16            11.27
3y                    27-Apr-17            11.08
5y                    29-Jun-19           11.327

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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