A Review of the Nigerian Energy Industry

Financial market products & services update

29 September 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria is to benefit from a $500 million (N80 billion) World Bank credit to increase access to finance for medium and small scale enterprises, MSME, in agriculture, trade, light-manufacturing, and services. The Executive Board of Directors of the Bank, which gave approval for the facility on Friday, said the International Bank for Reconstruction and Development, IBRD, credit would help stimulate economic growth and create jobs. The Development Finance Project, the Board said, would provide stable funding to support the growth of Nigeria’s MSMEs through the establishment of a Development Finance Institution, DFI.

Financial marketsFX: Relatively quiet day, market opened at 163.90/00. We were able to close a tad lower again at 163.85/95 with the help of some last minute USD inflow from suspected central bank intervention.

FIXED INCOME: Friday produced modest gains across the bond market (-2bps). Seeing good activity on those but market still treads with caution as the previous sour taste on those cannot be quickly forgotten. We traded a little weaker in tbills on Friday (majorly OMO bills) due to an ‘unannounced OMO auction’ but the short dated papers still holding steady. Most of street was unaware of the auction and this set the theme for the day. Two maturities were floated but no sale was made due to poor participation considering only a few players got to know about the auction.

COMMODITIES: West Texas Intermediate crude fell from the highest price in seven days as concern eased over the risk of a supply disruption in the Middle East. WTI for November delivery slid as much as 72 cents to $92.82 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.90 at 2:56 p.m. Singapore time.

EU: Mario Draghi’s strategy for reviving the euro area looks like devaluation. While the European Central Bank president says the exchange rate isn’t a policy target, officials aren’t secretive about their approval of the currency’s 9 percent slide. The depreciation increases the cost of imports and boosts exporters’ competitiveness, aiding the effort to revive inflation that data tomorrow will probably show is at the weakest since 2009.

INDIA: India’s rupee fell toward a seven- week low as an acceleration in U.S. economic growth boosted odds for a Federal Reserve interest-rate increase. The U.S. economy expanded at a 4.6 percent annualized rate in the second quarter, the fastest pace since 2011, official data showed Sept. 26 after the close of Indian markets. The rupee declined 0.4 percent to 61.385 per dollar as of 10:15 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg.

Macro Economicindicators
Inflation rate (YoY) for August. 2014                   8.50%
Monetary Policy Rate current                                12.00%
FX Reserves (Bn $) as at September 22 2014     39.602

Money Market Highlights

O/N                                  10.9167
30 Day                              12.1340
90 Day                              12.9929
180 Day                             13.8294
USD 1 Month                    0.1540
USD 2 Months                  0.1994
USD 3 Months                  0.2331
USD 6 Months                  0.3304
USD 12 Months                0.5777

Benchmark Yields
Tenor          Maturity         Yield (%)

91d                 25-Dec-14          10.83
182d               05-Mar-15         11.06
364d               03-Sep-15          11.53
2y                    16-Aug-16          11.93
3y                    31-Aug-17           11.46
5y                    29-Jun-19           11.56

Indicative Currency Exchange Rates
Bids         Offer

EURUSD      1.2683       1.2693
GBPUSD       1.6228      1.6238
USDJPY        109.64      110.04
USDCHF       0.9515      0.9535
GBPEUR       1.2796      1.2806
USDZAR       11.2987    11.3987
USDNGN      163.50     164.25
JPYNGN       1.4912       1.5412
CHFNGN      171.83       175.83
EURNGN      207.37      211.37
GBPNGN       265.33     269.33
ZARNGN         14.47       16.47

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