A Review of the Nigerian Energy Industry

Financial market products & services update

27 September 2014, Sweetcrude, Abuja – Local and international financial market products and services update.
FX: Market opened a tad higher than previous level at 164.00/10 which has been the trend lately, eventually breaking into the 164 level after few tests in the past few days. With few sellers at the 164.05-164.20 range, following expectation of a likely CBN intervention, the pair was capped at 164.25 for the day with initial support at the 163.90-164.00 range. CBN further showed some resolve to defend the local unit supplying estimated $150 mio liquidity in the last 30 minutes of today’s trading session which spurred a 2 big figure intraday appreciation for the pair. The pair traded a 162.30 low and closed a tad higher at 162.50/60.

Financial marketsFIXED INCOME: Bond market saw another round of selling today. Locals still the major drivers and all based on sentiment on the bearish tone of MPC meeting and the dropping oil price. The short to medium end of the curve was most affected as the yields jumping an average of 20bps. In the midst of all the selling we started to see interest from PFAs who started taking the offers very much available in the market. Tbill market remains a laggard as current market liquidity still giving support as street remains more worried about longer tenor. Stop rates at PMA coming in at 10.20 (+40bps), 10.64 (-15bps), 11.54 (-) yields on 91day, 182day and 364day respectively.

COMMODITIES: WTI for November delivery was at $92.82 a barrel in electronic trading yesterday. The contract increased $1.24 to $92.80 yesterday, the highest close since Sept. 18. The volume of all futures traded was about 37 percent below the 100- day average. Brent for November settlement was 6 cents lower at $96.89 a barrel on the London-based ICE Futures Europe exchange.

NIGERIA: The coming 2015 elections will not deplete the fortunes and reserves of the country, Godwin Emefiele, Central Bank of Nigeria (CBN) governor, said in New York , Wednesday. Speaking at the Africa Business Summit, a high level international forum on Africa’s investment climate and markets, with the theme, “Africa is rising, There are challenges, Still We Rise”, Emefiele said the economy of the Nigeria was currently doing well and that the 2015 elections would not make it take a downturn. He added that Nigeria currently has a reserve of about $41 billion, which is the highest in the continent. He said though there were predictions in some quarters that crude prices would fall and revenues would drop, a $39-$41billion reserve was more than sufficient to support imports and production for the next seven to eight months.

US: The U.S. reports durable-goods orders and initial jobless claims numbers today after new-home sales surged in August to the highest level in more than six years. Some banks had played roles in fake trade at the port of Qingdao, Wu Ruilin, deputy head of China’s State Administration of Foreign Exchange said, pledging to severely punish perpetrators. Reserve Bank of Australia Governor Glenn Stevens signalled he’s considering steps to limit home loan

CHINA: China’s stocks fell in Hong Kong, led by energy producers, after BNP Paribas SA reduced its recommendation on the nation’s shares and the government said it uncovered $10 billion of trade fraud.

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                      12.0455
90 Day                      12.9505
180 Day                    13.8989
USD 1 Month            0.1535
USD 2 Months          0.1995
USD 3 Months          0.2351
USD 6 Months          0.3311
USD 12 Months        0.5827

Benchmark Yields
Tenor          Maturity        Yield (%)

91d                 11-Dec-14          10.83
182d               05-Mar-15        10.78
364d              03-Sep-15         12.55
2y                   16-Aug-16         11.60
3y                   31-Aug-17         11.46
5y                   29-Jun-19         11.56

Indicative Currency Exchange Rates
Bid        Offer

USDNGN       161.50      163.50
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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