A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets 115 August 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
FX: The pair was well bided yesterday, as market traded post oil flow sentiments. We had a swift move to the 162 level from a 161.65/75 open as market reacted to the less than expected volume of the state owned oil company’s USD inflow ($250 mio against the expected $350-$5000 mio), reversing the recent gains for the local unit. Thus, the pair depreciated to about the week’s opening level. We however resisted a move beyond 162.55 as the pair was a bit offered at the 162.40-55 range. We expect the 163.00 resistance level to hold short term, should current price action persist as we’ve seen more support for the pair at that level recently.

FIXED INCOME: Tbill yields stable for the most part of today. OMO bill maturity of NGN134billion gave some support to liquidity with O/N rates closing at 10.25%. On the bond side, at yesterday’s auction demand was weaker than in the July auction with the overall bid-to-cover ratio coming in at 1.7 compared to 2.6 at the last auction. Auction yields were marginally higher at 11.123% (+12bp from July), 12.22% (+3bp) and 12.389% (+24bp) for the 13.05% Aug 2016s, 14.20% Mar 2024s and 12.149% Jul 2034s, respectively. In the secondary market, all bonds were well offered for the most part of the day, closing higher on the back of Wednesday’s auction results.

COMMODITIES: Brent for October settlement climbed as much as 68 cents, or 0.7 percent, to $102.75 a barrel on the London-based ICE Futures Europe exchange. The September contract expired yesterday after declining by 2.2 percent to $102.01.

NIGERIA: Nigerian companies are now taking advantage of the window opened through the successful issuance of Nigerian Sovereign Eurobonds, to raise long term funds, having issued a total of nine bonds to raise $30.4 billion from the International Capital Market. The Director General of the Debt Management Office, DMO, Dr. Abraham Nwankwo disclosed this in Abuja, yesterday. According to him, “for the first time in Nigeria’s economic history, the private sector have been enabled to access long term funds from both the domestic and international capital markets. “The successful issuances of three Nigerian Sovereign Eurobonds in the International Capital Market B one in 2011 and two in 2013 have opened the window for Nigeria’s private sector to raise required foreign currency funds.”

US: Treasury bonds rose for a second day as signs of tepid U.S. economic growth and the biggest yield premiums over European debt in more than a decade bolstered demand at the government’s $16 billion sale of the securities. The longest-maturity U.S. government debt was sold at the lowest yield since May 2013.

CHINA: China’s stocks rose, sending the benchmark index to a fifth week of gains, amid speculation the government will take further steps to support the economy. Technology and financial companies led gains. Shenzhen Laibao High-Technology Co. jumped 5.6 percent as a gauge of technology stocks extended the biggest advance among industry groups this week.

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                       12.8622
90 Day                       13.7580
180 Day                     14.4225
USD 1 Month            0.1550
USD 2 Months          0.1942
USD 3 Months          0.2311
USD 6 Months          0.3292
USD 12 Months        0.5508

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   162.17           162.87
EURUSD    1.3280          1.3483
GBPUSD    1.6588          1.6792
USDJPY     102.58          102.63
USDCHF    0.8949         0.9161
GBPEUR    1.2370          1.2575
USDZAR    10.4799        10.6679
JPYNGN    1.5304           1.6311
CHFNGN   177.31            179.00
EURNGN   216.78           218.17
GBPNGN    270.53          271.96
ZARNGN    14.46             16.28

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