A Review of the Nigerian Energy Industry

Financial market products & services update

16 September 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Foreign direct investments (FDIs) into Nigeria, Africa’s largest economy, reached some $963.7 million first half of the year in response to government’s intense drive to pull in investors to grow the economy and create jobs. But much of the investment inflows within the period were rather seen in portfolio investments which at $7.79 billion dominated the $9.708 billion total capital imports. Other investments in trade credits, loans, currency deposits and other claims made up the remaining $958.4 million inflows. Equity investment inflows alone between January and June stood at $7.08 billion, showing foreign investors’ preference; bonds attracted some $1.214 billion while about $436 million were invested in money market instruments. The National Bureau of Statistics (NBS) said investment inflows prior to 2013 was rising steadily, recovering from the lows recorded post the 2008 financial crisis.

Financial marketsFIXED INCOME: Market started weak yesterday in both tbill and bond markets with inflation prints (8.5%) having more or less no impact. October bills seemed to be in hot demand yesterday as market found a safe haven ahead of the tbill auction. We saw chunky requests for offers on those. Besides the bond auction scheduled to hold on Wednesday, we think that the cautious trading in the bond market continues to be associated with Brent trading at 96.63 levels as market sentiments regarding the MPC decision being anticipated on September 18 and 19 is for the stance to be largely unchanged.

FX: Market opened at 162.82/92 under some pressure as the relative dearth of LHS liquidity took its toll on the pair. USDNGN closed at 162.85/95.

CBN RDAS AUCTION: CBN had $350 million on offer at yesterday’s RDAS auction and sold $349.85 million. We had a 1 point depreciation in marginal rate to 155.75 (1% commission excluded) having been maintained at 155.74 for the previous 4 auctions. 22 banks participated.

COMMODITIES: Brent was steady in London. WTI for October delivery was at $92.69 a barrel in electronic trading on the New York Mercantile Exchange, down 23 cents.

US: U.S. manufacturing output fell for the first time in seven months in August, but the underlying trend remained consistent with a steadily expanding factory sector. That view was bolstered by other data on Monday showing factory activity in New York state jumped to its highest level in nearly five years in September. “The weakness in factory output in August is likely to be transitory,” reports stated.

CHINA: China’s foreign direct investment inflows in August fell to a low not seen in at least 2-1/2 years, underscoring the challenges to growth facing the world’s second-biggest economy. The weak investment data comes as China’s economic growth appears to be hitting a soft patch after a bounce in June, with indicators ranging from imports to industrial output and investment all pointing to sluggish activity.

Macro Economic Indicators
Inflation rate (YoY) for August. 2014                  8.50%
Monetary Policy Rate current                              12.00%
FX Reserves (Bn $) as at September 12 2014   39.543

Money Market Highlights

O/N                           10.5333
30 Day                      10.7532
90 Day                      10.7694
180 Day                    10.7963
USD 1 Month            0.1536
USD 2 Months          0.1950
USD 3 Months          0.2346
USD 6 Months          0.3309
USD 12 Months        0.5847

Benchmark Yields
Tenor         Maturity        Yield (%)

91d               11-Dec-14          11.09
182d             05-Mar-15       10.93
364d            03-Sep-15         11.19
2y                 16-Aug-16         11.45
3y                 31-Aug-17         11.55
5y                29-Jun-19          11.70

Indicative Currency Exchange Rates
Bid       Offer

USDNGN      162.70     163.40
EURUSD       1.2839     1.3041
GBPUSD       1.6081      1.6284
USDJPY        107.05      107.07
USDCHF       0.9292     0.9393
GBPEUR       1.2404      1.2608
USDZAR      10.8517    11.0533
JPYNGN        1.4727      1.5734
CHFNGN      173.68      175.37
EURNGN      210.31      211.67
GBPNGN      263.15      264.56
ZARNGN        13.81       15.79

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