A Review of the Nigerian Energy Industry

Financial market products & services update

30 September 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria is in talks with private investors to set up a national airline as it revamps airport infrastructure and expands air capacity, Aviation Minister Osita Chidoka said. Nigeria will spend about $2 billion within the next four years to rebuild old airport terminals and construct new ones as demand for air travel in the country swells, Chidoka said in an interview with Bloomberg TV Africa in New York that will be aired Oct. 3. The government wants to start a national carrier within the same period to tap from the growth.

Financial markets 1FX: Another calm trading session yesterday, with the pair pretty much stable for most part of the day trading between the 163.95-164.11 range. We however had a late spike in activities inspired by yet another intervention from CBN towards the last 30 mins of the day’s session. The late USD inflow pushed the pair to a 163.65 intraday low only to close a tad higher at 163.70/80.

CBN increased the amount on offer at yesterday’s RDAS to $500 mio due to the upcoming public holiday. $499.56 mio was sold at the auction with marginal rate maintained at 157.3075 (1% commission inclusive). 20 banks participated at the auction.

Month end on Tuesday and we see Nigeria closing lackluster ahead of a public holiday (on the 1st) to start the month of October. Bonds opened strong yesterday. A bit of varied selling to close the day in the bond market but nothing overwhelming (+1bps). Friday’s OMO auction was re-conducted on Monday by the CBN. Same maturities on offer. NGN8.9bn of 73day paper sold at 10.55% discount (10.78% yield) and NGN40.7bn of 164day paper at 10.80% discount (11.35% yield). Secondary market tbill has had constant themes with street being major buyers of short dated paper (50 days and below).

COMMODITIES: West Texas Intermediate crude narrowed its discount to Brent to the least in more than a year as U.S. economic growth outpaced that of Europe, bolstering demand for the American benchmark oil. WTI for November delivery rose $1.03, or 1.1 percent, to settle at $94.57 a barrel on the New York Mercantile Exchange today.

EU: German unemployment unexpectedly rose for a second month as tension with Russia and a faltering euro-area recovery worsened the outlook for Europe’s largest economy. The number of people out of work climbed a seasonally adjusted 12,000 to 2.92 million in September, the Nuremberg- based Federal Labor Agency said today. The German economy contracted in the second quarter and the strength of its rebound is key to reviving growth and inflation in the 18-nation euro area.

CHINA: Chinese manufacturing gauge fell from an initial reading a week ago as a property slump weighs on the world’s second-largest economy. The Purchasing Managers’ Index and Markit Economics for September was at 50.2, lower than the preliminary figure of 50.5 and unchanged from August. Numbers above 50 signal expansion. Economists have cut estimates for this year’s gross domestic product growth after data on industrial profits, factory output and credit showed a deteriorating outlook.

Macro Economic Indicators
Inflation rate (YoY) for August. 2014                     8.50%
Monetary Policy Rate current                                 12.00%
FX Reserves (Bn $) as at September 26 2014     39.565

Money Market Highlights

O/N                                10.8417
30 Day                           12.2857
90 Day                           13.0989
180 Day                          14.1347
USD 1 Month                0.1525
USD 2 Months              0.1979
USD 3 Months              0.2351
USD 6 Months              0.3306
USD 12 Months             0.5802

Benchmark yields
Tenor            Maturity         Yield (%)

91d                  25-Dec-14          10.98
182d               05-Mar-15          11.23
364d              03-Sep-15           11.39
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         1.2681          1.2691
GBPUSD          1.6263         1.6273
USDJPY           109.43         109.83
USDCHF          0.9516         0.9536
GBPEUR          1.2824         1.2834
USDZAR          11.2381        11.3381
USDNGN         163.50          164.25
JPYNGN          1.4941           1.5441
CHFNGN         171.82           175.82
EURNGN         207.83         211.33
GBPNGN          265.90         269.90
ZARNGN            14.55           16.55

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