A Review of the Nigerian Energy Industry

Financial market products & services update

18 September 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The European Union (EU) said yesterday it had concluded plans to spend about €600 million in ‎Nigeria over the next five years. Most of the spending, it noted, is targeted at helping Nigeria to attract private sector foreign investments into the country’s power sector as well as to boost food security. The Ambassador, Head of Delegation of the European Union to Nigeria and the Economic Community of West African States (ECOWAS), Mr. Michael Arrion, ‎explained that the amount represents about five per cent of the EU’s entire budget for the African, Caribbean and Pacific (ACP) countries.

Financial markets 1FIXED INCOME: Market was quiet yesterday ahead of a dual auction (bonds and bills auction yesterday) and MPC meeting starting today. Most tbills have their own specific dynamics but market as usual feels typically positioned the same way on many papers. Lots of sellers on the OMO bills – 01 Jan 15, 29 Jan 15 but only a few trades went through. Overall, we closed flat on the day in both tbill and bond market as street awaiting auction results.

COMMODITIES: Brent declined in London. Brent for November settlement declined as much as 69 cents, or 0.7 percent, to $98.28 a barrel on the London-based ICE Futures Europe exchange.

FX: Market opened at 163.20/30, as we still saw some buying pressure on the USDNGN. The pair closed at 163.40/50.

CBN RDAS AUCTION: CBN had $300 million on offer at yesterday’s RDAS auction and sold $299.89 million. Marginal rate was maintained at 155.75 (1% commission excluded) from the previous auction. 19 banks participated.

US: The Federal Reserve on Wednesday renewed its pledge to keep interest rates near zero for a “considerable time,” but also indicated it could raise borrowing costs faster than expected when it starts moving. Many economists and traders had expected the U.S. central bank to alter the rate guidance it has provided since March, given generally improving data on the economy’s performance.

CHINA: China does not need strong policy stimulus as long as economic growth hovers within the government’s targeted range, a policy adviser to the People’s Bank of China said on Thursday, an indication Beijing will continue with targeted steps to support growth. The remarks by Chen Yulu, a member of the central bank’s monetary policy committee, came a day after a reported liquidity injection into China’s major banks by the PBOC heightened speculation that Beijing was stepping up efforts to support a shaky economy. Money market rates dropped on Thursday, as traders reported more liquidity in the financial system.

Macro Economic Indicators
Inflation rate (YoY) for August. 2014                    8.50%
Monetary Policy Rate current                               12.00%
FX Reserves (Bn $) as at September 16 2014     39.606

Money Market Highlights

O/N                                      10.5575
30 Day                                 10.5983
90 Day                                 10.6677
180 Day                               10.8778
USD 1 Month                      0.1530
USD 2 Months                    0.1925
USD 3 Months                    0.2341
USD 6 Months                    0.3304
USD 12 Months                  0.5827

Benchmark Yields
Tenor           Maturity          Yield (%)

91d                 11-Dec-14                11.08
182d              05-Mar-15              10.04
364d              03-Sep-15               11.25
2y                   16-Aug-16               11.45
3y                   31-Aug-17               11.46
5y                   29-Jun-19              11.56

Indicative Currency Exchange rates
Bid          Offer

USDNGN         162.90        163.60
EURUSD          1.2778        1.298
GBPUSD          1.6191         1.6393
USDJPY           108.64        108.67
USDCHF         0.9332        0.9433
GBPEUR          1.2548        1.2752
USDZAR         10.9057       11.1091
JPYNGN         1.4522          1.5529
CHFNGN        173.15           174.84
EURNGN        209.57          210.93
GBPNGN        265.27        266.66
ZARNGN         13.81            15.73

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