A Review of the Nigerian Energy Industry

Financial market products & services update

22 September 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
FX: Same story on NGN on Friday with sentiments unchanged. The pair attempted a break at the 164 key resistances again after opening at the mid 163 level.

CBN yet again intervened towards the last 30 minutes of the trading session, this time successful in pushing for a lower close than previous level. The pair closed the week at about 163.25/35.

Financial markets 1FIXED INCOME: The CBN’s Monetary Policy Committee voted to keep all interest rates unchanged (asymmetric corridor retained around 12% MPC, 15% private sector CRR, 75% public sector CRR). Very significantly – 5 members voted for an increase in the private sector cash reserve ratio (CRR) and 1 member voted for an asymmetric move. Slight selling on Friday seen in the secondary market on bonds before the MPC address. Tone at the MPC sounded hawkish but most tightening done already in the past putting the committee in a tight spot. We expect slightly bearish sentiments on today. FAAC inflows of about NGN340bn hit the system late afternoon causing a slight rally on the short end of the T-Bill curve. Expecting to see another OMO auction this week to try and drain the excess liquidity from FAAC.

NIGERIA: The Federal Government will likely stop funding road construction across the country in the next few years, possibly before 2019, Minister of Information, Labaran Maku, said in Abuja yesterday. Speaking at the Ministerial press briefing during which the Minister of Works, Mr. Mike Onolememen presented his score-card, Maku explained that by 2019, the construction and maintenance of roads would be done principally by the private sector.
He also lamented how much the insurgency in the northeast had negatively impacted on the development of the nation’s road infrastructure, saying most of our roads would have been fixed with the trillions of naira wasted on the war.

US: The prospect of higher U.S. interest rates is proving to be a boon for the biggest owners of Treasuries outside of the Federal Reserve. While the government bonds have fallen this month as the Fed boosted its forecast for how much rates will rise next year, the dollar climbed to its highest level since 2010 against a broad range of currencies

COMMODITIES: Brent crude declined for the third time in four days before manufacturing data from China, the world’s second-biggest oil consumer. West Texas Intermediate fell in New York. Futures dropped as much as 0.6 percent in London

CHINA: Chinese stocks fell, sending a gauge of mainland companies in Hong Kong to its lowest level in two months, after Finance Minister Lou Jiwei damped speculation the government will boost economic stimulus.
Petro China Co. and China Petroleum & Chemical Corp. both slid at least 2 percent in the city.

Macro Economic Indicators
Inflation rate (YoY) for August. 2014                  8.50%
Monetary Policy Rate current                              12.00%
FX Reserves (Bn $) as at September 18 2014   39.595

Money Market Highlights

O/N                              10.9167
30 Day                         12.4644
90 Day                         13.2812
180 Day                       14.2049
USD 1 Month          0.1540
USD 2 Months        0.1995
USD 3 Months        0.2331
USD 6 Months        0.3309
USD 12 Months      0.5847

Benchmark Yields
Tenor      Maturity     Yield (%)

91d             11-Dec-14        10.85
182d           05-Mar-15      11.45
364d          03-Sep-15        12.55
2y               16-Aug-16        11.58

Indicative Currency Exchange Rates
Bid         Offer

USDNGN         163.30       164.00
EURUSD          1.2749       1.2952
GBPUSD           1.6235      1.6437
USDJPY           108.98      109.02
USDCHF          0.9343      0.9447
GBPEUR          1.2610       1.2815
USDZAR          11.0384     11.2401
JPYNGN           1.4530       1.5535
CHFNGN          173.59       175.22
EURNGN          209.87      211.24
GBPNGN          266.97       268.36
ZARNGN            13.81         15.61

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