A Review of the Nigerian Energy Industry

Financial market products & services update

finance01 September 2014, Sweetcrude, Houston – Local and international financial market products and services update.
FX: Absence of left hand side flows saw the local unit come under pressure to trade a week’s high of 162.50. Most of the pressure was from the BDC banks. A retracement is in the horizon as we expect a couple oil flows this week, and also the $400-$500mio from the state owned Oil Company.

FIXED INCOME: We closed the week on average 3bps tighter across the bond space fuelled by JP Morgan GBI-EM, although flows continue to be subdued from after midday on Friday. Technically, the bond curve looks expensive making the 1-year space the next best thing. Not really surprising that the T-Bill space was a little muted to about 3bps weaker ahead of the auction on Wednesday. On offer is NGN27.85bn – 91days (4th December 2014), 65.00bn – 182days (5th March 2015), 90.00bn – 364days (3rd September 2015) Ebola headlines still not having any effect on the markets.

NIGERIA: OPEC crude oil production increased to a one-year high in August, led by surging output in Nigeria, a Bloomberg survey showed. Production by the 12-member Organization of Petroleum Exporting Countries rose by 891,000 barrels a day to 31.033 million, according to the survey of oil companies, producers and analysts. Last month’s total was revised 80,000 barrels a day lower to 30.142 million because of changes to the Nigerian and Iranian estimates. Nigeria, Saudi Arabia and Angola led gains as new deposits.

USA: Consumer spending in the U.S .unexpectedly dropped in July for the first time in six months, sign households are lagging behind as wages fail to accelerate. Household purchases decreased 0.1 percent after increasing 0.4 percent in June, Commerce Department figures showed today in Washington. None of the 79 economists in a Bloomberg survey projected a decrease. Incomes climbed 0.2 percent, the smallest monthly advance this year.

COMMODITIES: West Texas Intermediate headed for the first weekly gain in more than a month as U.S. economic growth beat estimates, bolstering the demand outlook in the world’s largest oil consumer. Brent rose in London. Futures climbed as much as 0.6 percent in New York and are up 1.3 percent since Aug. 22, breaking the longest run of weekly losses since November. The U.S. economy expanded at a 4.2 percent annualized rate in the second quarter, the Commerce Department said, compared with a 3.9 percent increase predicted in survey.

CHINA: Industrial & Commercial Bank of China Ltd., the world’s largest lender by assets, reported a fourth straight quarter of profit growth below 10 percent as the nation’s biggest banks enter an era of more subdued earnings. Net income rose 7.5 percent to 74.8 billion Yuan ($12.2 billion), in the three months ended June 30 from a year earlier, based on the Beijing-based company’s exchange filing yesterday.

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                              10.9167
30 Day                         12.5564
90 Day                         13.4597
180 Day                       14.3868
USD 1 Month             0.1570
USD 2 Months           0.1959
USD 3 Months           0.2336
USD 6 Months           0.3299
USD 12 Months         0.5656

Benchmark Yields
Tenor          Maturity       Yield (%)

91d                04-Dec-14        10.51
182d              05-Mar-15       11.42
364d             06-Aug-15        12.75
2y                   16-Aug-16       11.00
3y                   31-Aug-17       10.97
5y                   29-Jun-19       11.02

Indicative Currency Exchange Rates
Bid          Offer

USDNGN     161.70         162.85
EURUSD      1.3032        1.3235
GBPUSD      1.6534         1.6736
USDJPY       104.14         104.16
USDCHF      0.9133        0.9234
GBPEUR      1.2565         1.2767
USDZAR     10.5580      10.7608
JPYNGN      1.5098        1.6309
CHFNGN     176.12         177.85
EURNGN     212.81        214.16
GBPNGN     269.74        271.13
ZARNGN     14.39           16.33

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