A Review of the Nigerian Energy Industry

Financial market products & services update

finance04 September 2014, Sweetcrude, Houston – Local and international financial market products and services update.
FX: Another uneventful day for the pair as market continues to be range bound. Trading in the range 162.27- 162.50 levels. Outlook is one of stability for the pair at least in the short term. Key factor to look at would be the Brent crude oil prices, Typically panic sets in onshore if we see levels go below $90/barrel. CBN offered $300mio and sold $298.99mio, lowest intervention rate 157.2873 (1% commission inclusive).

FIXED INCOME: Nigeria very much lacklustre yesterday as street focused on the t-bill auction but short dated paper still holding firm. Issuance at the auction was sizeable at NGN182.85bn (USD1.12bn) in 3m, 6m and 1yr paper. Stop rates at 10.03%, 10.71% and 11.54% yield respectively. We are keeping an eye on what is going on with oil prices.

NIGERIA: Indication of steady progress in the nation’s oil and gas sector emerged Wednesday as Nigeria’s was listed for the first time among the highest paying contract jobs in oil and gas sector worldwide. This is coming as the nation advances in its move to increase local participation in the industry through the Nigerian content agenda of the Federal Government. The latest release by Swift Worldwide Resources placed Nigeria third and fourth respectively among the ten highest paid contract jobs, which was led by Australia in two different categories. According to the report, which was obtained by The Guardian, a Drilling Manager in Nigeria earns up to $2, 844 (about N455, 040) per day and Project Services Director earning about $2, 817 (N450, 720) per day.

USA: Fannie Mae is planning to sell 10- year benchmark debt in the first offering of its type from a government-sponsored enterprise in more than two years, according to FTN Financial. The bonds, which are expected to price tomorrow, may yield about 0.33 percentage point more than Treasuries, compared with a spread of about 0.5 percentage point on Freddie Mac’s 2012 deal of the same maturity, FTN analyst Jim Vogel wrote today in a note to clients.

COMMODITIES: WTI crude fell for the second time in three days after industry data showed fuel supplies increased in the U.S., the world’s largest oil consumer. Brent declined in London. Futures dropped as much as 0.8 percent in New York. Gasoline and distillate inventories each expanded by 400,000 barrels last week, the American Petroleum Institute was said to report yesterday.

CHINA: China is strengthening budget management expenditures become more transparent and efficient according to an executive meeting of the State Council. The meeting presided over by Premier Li Kegiang on Tuesday, said China is aiming a modern fiscal system, a highlight in the country ongoing fiscal reform. The pledge came in managing the trillions of yuan involved in fiscal revenue and spending.

Macro Economic Indicators
Inflation rate (YoY) for July. 2014                  8.30%
Monetary Policy Rate current                          12.00%
FX Reserves (Bn $) as at September 2014    39.601

Money Market Highlights

O/N                                11.7917
30 Day                           12.7118
90 Day                           13.5306
180 Day                         14.4962
USD 1 Month                 0.1561
USD 2 Months              0.1966
USD 3 Months              0.2341
USD 6 Months              0.3289
USD 12 Months            0.5656

Benchmark Yields
Tenor           Maturity         Yield (%)

91d                  04-Dec-14          10.33
182d                05-Mar-15         11.42
364d               06-Aug-15          12.72
2y                    16-Aug-16           11.16
3y                    31-Aug-17           11.19
5y                    29-Jun-19          11.21

Indicative Currency Exchange Rates
Bid        Offer

USDNGN         161.90      162.90
EURUSD         1.3045      1.3247
GBPUSD          1.6357      1.6559
USDJPY           104.90     105.95
USDCHF          0.9082    0.9284
GBPEUR          1.2417      1.2620
USDZAR         10.6297   10.8297
JPYNGN           1.5071      1.5983
CHFNGN          175.80     177.93
EURNGN          212.46     214.63
GBPNGN           266.42    268.62
ZARNGN           14.19        16.22

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