A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets 129 August 2014, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: The National Bureau of Statistics (NBS) has revised the size of Nigerian economy to about N81.009 trillion following it latest final rebasing of the country’s Gross Domestic Product (GDP), using the Expenditure Approach between 2010-2013. This represented a marginal increase from the projected N80 trillion in 2013 when the output method was used the compute the rebased GDP in May. According to the GDP Report (Expenditure Approach) 2010-2013 released by the statistical agency, the final consumption of Household Items Expenditure accounted for the largest chunk of the rebased GDP figures at about N58.13 trillion in 2013, up from the N42.115 trillion of the preceding year.

FIXED INCOME: MARCH 2024s were below 12% levels with the rest of the curve following suit with the exception of the July 2034s, which is the only actively tradeable bond above 12% yield. OMO maturities in excess of NGN198billion were met by an OMO auction by the CBN. Stop rate remains capped at 10.80% discount (11.25% yield) with only NGN184 billion sold. The short end of the tbill curve continues to receive attention. O/N rates closed at 11.50%.

FX: Sentiments remain unchanged on USDNGN, as market opened at 161.80/90, limiting the impact of the USD sales by oil companies. Market closed at 162.15/25.

USA: The U.S. economy rebounded more strongly than initially thought in the second quarter with a bigger chunk of the growth driven by domestic demand in a bright sign for the future. Gross domestic product expanded at a 4.2 percent annual rate instead of the previously reported 4.0 percent pace, the Commerce Department said on Thursday. Both business spending and exports were revised higher, while a buildup in business inventories was smaller than previously estimated – a mix of growth that provides a stronger underpinning for the remainder of the year.

COMMODITIES: Brent crude oil fell and U.S. crude rose as ample global supply and lacklustre demand pressured the global benchmark while positive U.S. economic data supported oil prices in the world’s largest oil consumer. October Brent crude fell by 26 cents to settle at $102.46 a barrel. Last week, the contract hit a 14-month intraday low of $101.07 and it has been unable this week to break out of the $101-$104 range.

EUROPE: European Central Bank policymaker Ewald Nowotny is worried about the euro zone economy, which he said was showing signs of clouding over. Asked about inflation and unemployment, he told reporters: “I am concerned as well. What I have presented here is not a really great success story. We had expected an upturn in the euro zone and we have an upturn – 2014 is better than 2013 – but it is weaker than expected.”

Macro Economic Indicators
Inflation rate (YoY) for July. 2014                     8.30%
Monetary Policy Rate current                              12.00%
FX Reserves (Bn $) as at August 26th 2014    39.621

Money Market Highlights

O/N                                     11.3333
30 Day                               12.5863
90 Day                               13.5255
180 Day                             14.4101
USD 1 Month                    0.1545
USD 2 Months                  0.1969
USD 3 Months                  0.2336
USD 6 Months                  0.3319
USD 12 Months                0.5631

Benchmark Yields
Tenor            Maturity            Yield (%)

91d                  20-Nov-14              9.50
182d                05-Mar-15             10.94
364d               06-Aug-15              11.53
2y                     16-Aug-16              11.23
3y                     31-Aug-17              11.23
5y                     29-Jun-19               11.26

Indicative Currency exchange Rates
Bid              Offer

USDNGN              161.80           162.50
EURUSD               1.3067          1.3269
GBPUSD                1.6498           1.6700
USDJPY                103.80          103.83
USDCHF               0.9107          0.9209
GBPEUR               1.2504          1.2707
USDZAR              10.5004     10.7031
JPYNGN              1.5114           1.6126
CHFNGN              176.18          177.93
EURNGN             212.84           214.20
GBPNGN             268.45           269.85
ZARNGN             14.39               16.20

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