A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets26 August 2014, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: A new fund worth N50 billion and specifically to aid the mechanisation of agricultural practices in Nigeria is expected to be set up in a matter of months if not weeks by the Central Bank of Nigeria (CBN). This will allow for the speeding up of the full establishment of the 1,200 private sector driven Agricultural Equipment Hiring Enterprises (AEHE) across the states of the Federation. The directive was given by President Goodluck Jonathan at the commissioning and flagging off the 100,000 metric tons grains Silos at Sheda, Federal Capital Territory (F. C. T.) and the Agricultural Equipment Hiring Centers in Nigeria. Jonathan was represented by Vice President Namadi Sambo. Government hopes the new initiative will further his quest for a revolution in the country’s agriculture, aimed at self-sufficiency in food production with an eye for export.

FIXED INCOME: It was a weak performance in Nigeria credit yesterday – broadly 2- 7bps higher average across the spectrum. 20 November 2014 bills felt squeezed because they are quite illiquid, closing at 9.41% yield (-58bps). Valuations look fairly tight. The best yielding papers in the tbill market remain the OMO bills with the CBN in the market yesterday to sell NGN249bn of 8 Jan 2015 bills at 10.80% discount (11.25% yield). March 2024s edged higher again yesterday to close at 12.02% yield. There were a Lot of sellers on the short end bond curve as some profit takers came in to take advantage of last week’s rally.

COMMODITIES: Brent crude nudged up towards $103 a barrel on Tuesday but overnight gains may prove fragile in the face of persistent supply pressure and weak economic data in major consumer countries. October Brent crude rose 13 cents to $102.78 a barrel after closing up 36 cents.

FX: the USDNGN pair opened the week at 161.90/00, with a spike in activities, seeing more market volatility relative to last week’s lacklustre trading. Market closed at about 162.05/15.

RDAS CBN AUCTION: CBN had $400 million on offer at yesterday’s RDAS auction and sold $398.78 million. Marginal rate was maintained at 155.73 (1% commission excluded) and 23 banks participated at the auction.

USA: Sales of new U.S. single-family homes fell for a second straight month in July, but a surge in the stock of properties on the market and slower price gains should help stimulate demand in the months ahead. Other data on Monday showed activity in the vast services sector slowed again in August. The reports, however, did little to change views the economy is on a solid growth path, given relatively strong job growth and manufacturing activity.

Euro zone bond yields fell sharply on Monday after European Central Bank President Mario Draghi boosted speculation that the monetary authority will eventually loosen its policy by printing money. In stronger language than he has used in the past, Draghi said on Friday at an annual meeting of central bankers in Jackson Hole, Wyoming, that the ECB was prepared to respond with all its “available” tools should inflation drop further.

Macro economic Indicators
Inflation rate (YoY) for June. 2014                    8.20%
Monetary Policy Rate current                             12.00%
FX Reserves (Bn $) as at August 20th 2014    39.586

Money Market Highlights

O/N                           10.9167
30 Day                      12.2701
90 Day                      12.9107
180 Day                    14.0296
USD 1 Month           0.1550
USD 2 Months        0.1951
USD 3 Months        0.2384
USD 6 Months        0.3305
USD 12 Months      0.5656

Benchmark Yields
Tenor          Maturity        Yield

91d                23-Nov-14           9.41
182d              22-Mar-15           11.02
364d             07-Aug-15            11.36
2y                  16-Aug-16            11.36
3y                  31-Aug-17            11.29
5y                  29-Jun-19            11.35

Indicative Currency Exchange Rates
Bid         Offer

USDNGN             161.70     162.40
EURUSD              1.3092    1.3294
GBPUSD              1.6479     1.6681
USDJPY               103.88     103.91
USDCHF              0.9106     0.9207
GBPEUR              1.2466     1.2669
USDZAR              10.5892   10.7917
JPYNGN              1.5092     1.6105
CHFNGN             176.11      177.84
EURNGN            213.11      214.47
GBPNGN            267.98     269.38
ZARNGN             14.25       16.06

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