A Review of the Nigerian Energy Industry

Financial market products & services update

21 October 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Minister of Power, Prof. Chinedu Nebo, said on Monday that N160 billion investment was required annually to achieve improvement in power transmission network. Nebo spoke in Abuja at the Nigeria Society of Engineers (NSE) Expert Group Meeting on Developing Infrastructural Ranking and Scorecard Roadmap. He said that vandalism and obsolete infrastructure were some of the major impediments to the development of effective power transmission network for the nation. The transmission network is the life-blood of the entire electricity eco-system and currently, it is proving to be a weak link in the Nigerian electricity supply industry.

Financial markets 1FX: Market opened at 165.35/45 and closed at 165.15/25. Well supported by decent LHS flows in the market; as a considerable dip in demand ensured the pair resumed the week without further pressure. Still no Central Bank hand seen in the market.

FIXED INCOME: Unbelievably well behaved bond market yesterday after last week’s volatility. Flows were net buyers especially long end of the curve. Tbills recorded another semi-lackluster session. Most of the demand was on the 22 Jan bill which is the 91day paper on offer at the tbill auction on Wednesday (closing 59bps lower). Money market remained largely unchanged, very liquid with O/N rates closing at 10%. We expect some increase in liquidity will likely follow the AMCON bond maturities on 31st October. Good headlines for Nigeria in Ebola related news but most of the previous sell-off seen was an oil-driven sell-off.

COMMODITIES: Brent crude fell on speculation that OPEC won’t take any action to bolster prices before a meeting scheduled for Nov. 27 in Vienna. Brent for December settlement declined 76 cents to end the session at $85.40 a barrel on the London-based ICE Futures Europe exchange.

INDIA: European Commission President Jose Manuel Barroso attacked Prime Minister David Cameron’s pledge to restrict EU migration, and warned that the U.K. wouldn’t keep its free-trade rights if it left the EU. Barroso used a speech in London today to say Cameron was making a “historic mistake” in trying to end free movement within the EU, and that while European partners want to keep Britain in the bloc, “there are red lines.” The premier wrote yesterday that he planned to put EU immigration “right at the heart of our negotiations in Europe.” Cameron’s European policy has been driven in a more hostile direction since 2010 both by his own lawmakers and by the anti- EU U.K. Independence Party’s electoral success.

CHINA: China’s economic growth beat analysts’ estimates last quarter as export demand quickened and services expanded, bolstering the government’s case for avoiding broader stimulus measures. Gross domestic product rose 7.3 percent in the July- September period from a year earlier, the statistics bureau said today in Beijing. While that exceeded the 7.2 percent median estimate in a Bloomberg News survey of analysts, it was also the slowest expansion since the first quarter of 2009.

Macro Economic Indicators
Inflation rate (YoY) for Sept. 2014                8.30%
Monetary Policy Rate current                        12.00%
FX Reserves (Bn $) as at October 17 2014  39.353

Money Market Highlights

O/N                                10.8667
30 Day                           12.9292
90 Day                           13.7218
180 Day                         14.4834
USD 1 Month                0.1557
USD 2 Months              0.1980
USD 3 Months              0.2321
USD 6 Months              0.3230
USD 12 Months            0.5471

Benchmark Yields
Tenor          Maturity        Yield (%)

91d                 08-Jan-15         11.48
182d               09-Apr-15         11.82
364d               03-Sep-15         11.98
2y                    16-Aug-16         12.64
3y                    31-Aug-17          12.76
5y                    29-Jun-19         12.79

Indicative currency exchange Rates
Bid           Offer

USDNGN          164.90         165.60
EURUSD           1.2713          1.2915
GBPUSD           1.6059          1.6261
USDJPY            106.63          106.66
USDCHF           0.93675       0.9469
GBPEUR           1.2509          1.2713
USDZAR           10.0054       11.0000
JPYNGN           154.6837      154.7903
CHFNGN          174.61           176.30
EURNGN          211.07           212.43
GBPNGN          266.24          267.64
ZARNGN             14.07           16.00

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