A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets21 August 2014, Sweetcrude, Houston – Local and international financial market products and services update.

FX: USDNGN had another relatively quiet trading session yesterday as it’s been all week, still predominantly trading the low 162 levels. Flows were generally matched in market, with no big moves seen. The pair closed unchanged from previous day at 162.05/15 after brief slight swings intraday saw NGN touch a 162.30 high and a 162.04 low

FIXED INCOME: At the PMA, the CBN sold NGN40.64 billion of 91-DTM and NGN30billion of 182-DTM bills printing at effective yields of 10.15%, and 10.74% respectively. FAAC inflow and OMO bill maturity should give some support to liquidity in the system today with O/N rates closing at 14.25% yesterday. Both tbill and bond market activities yesterday saw a good amount of flows. Overall better buyers and stronger by about 5bps. There is the possibility of an OMO auction today or tomorrow as this has been the trend in recent times given the amount of cash hitting the system.

COMMODITIES: Brent crude fell from the highest price in three days as measure of China’s manufacturing missed estimates and the U.S. pledged to continue operations to stop Islamic radicals in Iraq. WTI also dropped. 37 cents drop on brent on London ICE Futures exchange and 35 cents drop on WTI on New York Merchantile Exchange.

NIGERIA: The Federal Executive Council on Wednesday approved a contract to the tune of N31.2bn for the evacuation of power from the 40 megawatts Kashimbila Multipurpose Dam. The approval was given during the council’s meeting presided over by President Goodluck Jonathan.

US: Improving labor markets are bringing Federal Reserve officials closer to a time when they can get back to traditional central banking, where there’s a tighter connection between changes in economic data and movements in short-term interest rates. According to the FOMC minutes released yesterday, some participants were increasingly uncomfortable with the committee’s forward guidance on keeping its benchmark rate low for a considerable time. Many participants said they might have to raise borrowing costs so0ner than they anticipated.

INDIA: India’s rupee halted a three-day advance on concern the Federal Reserve may increase interest rates, reducing the flow of funds to emerging markets. The rupee’s weakness is mainly because of the Fed minutes, which were a tad hawkish.

Macro Economic Indicators
Inflation rate (YoY) for June. 2014                   8.30%
Monetary Policy Rate current                           12.00%
FX Reserves (Bn $) as at August 15th 2014   39.593

Money Market Highlights
O/N                              10.9167
30 Day                         14.4959
90 Day                         14.7695
180 Day                       15.3457
USD 1 Month              0.1550
USD 2 Months            0.1938
USD 3 Months            0.2349
USD 6 Months            0.3270
USD 12 Months          0.5561

Benchmark yields
Tenor          Maturity       Yield
91d                 20-Nov-14       10.26
182d               05-Mar-15       11.07
364d              06-Aug-15        11.37
2y                    16-Aug-16        11.29
3y                    31-Aug-17         11.31
5y                    29-Jun-19        11.29

Indicative Currency Exchange Rates
                             Bid           Offer
EURUSD         1.3292           1.3302
GBPUSD          1.6491          1.6693
USDJPY           103.77          103.79
USDCHF          0.9071         0.9173
GBPEUR          1.2398          1.2600
USDZAR         10.6178        10.8207

USDNGN         161.72           162.42
JPYNGN           1.5112          1.6123
CHFNGN          176.80          178.53
EURNGN          214.43          215.78
GBPNGN          268.21           269.61
ZARNGN            14.22             16.02

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