A Review of the Nigerian Energy Industry

Financial market products & services update

NIGERIA: Nigerian cocoa-processing companies say the cost of exporting their products to Europe has been inflated by 30 percent because of a stalemate in agreeing new trade terms with the European Union. Nigerian cocoa butter and cake exports are charged from 4.2 percent to 6.1 percent of freight-on-board values as taxes at EU ports without an agreement, Felix Oladunjoye, executive secretary of the Cocoa Processors Association of Nigeria said in a phone interview today from Lagos, the commercial capital. Nigeria is the only country in West Africa yet to sign the Economic Partnership Agreement protocol on free trade by the EU and African, Caribbean and Pacific countries, he said.

Financial marketsFX: Market opened at 165.15/25 and closed at 165.45/55. News of an oil major offering about $50 mio had initially calmed the market at open, coupled with expectations that RHS flows would decline owing to overturn of events at the equity market (ASI up 1.5% week to date) and some stability in oil price above $85/bbl this week. However, with a change in sentiments seen, pockets of demand filtered into market ensuring the pair tested the mid 165 levels by close.

FIXED INCOME: We opened bills on Tuesday unchanged but started to grind tighter during the day especially in the 30minutes to close. Bills that will be on offer as 91day papers were suddenly looking cheap and most of them were squeezed (22 jan 15, 05 feb 15 and 19 feb 15) and this filtered into the rest of the curve. Bonds remained well bid. Opened on a strong foot and remained pretty much so till close of trading. Both bond and tbill demand was all street. Some sort of confidence starting to come into the market with Brent a little stable at the $85 handle.

COMMODITIES: West Texas Intermediate crude held above $82 a barrel before a report that may show motor-fuel inventories shrank to a two-year low in the U.S., the biggest oil consumer. WTI for December delivery was at $82.47 a barrel in electronic trading on the New York Mercantile Exchange, down 2 cents, at 2:58 p.m. Singapore time.

EU: The euro remained lower after falling yesterday, with a Purchasing Managers Index due tomorrow forecast to show manufacturing in the region contracted for the first time in 16 months, adding to the case for more stimulus. The 18-nation currency slid the most in a week yesterday as billionaire hedge-fund manager David Tepper said investors should sell it because of the European Central Bank’s policies. The euro was at $1.2726 as of 6:37 a.m. in London after falling 0.7 percent yesterday to $1.2716, the biggest drop since Oct. 14.

INDIA: India’s rupee climbed to a one-week high on optimism lower oil prices will help cool inflation and narrow the budget deficit. Brent crude has dropped 23 percent since the end of June to $86.25 a barrel, reducing costs for India, which imports almost 80 percent of its oil. Consumer prices rose 6.46 percent last month from a year earlier, the slowest pace since the index was created in January 2012, the government reported Oct. 13. India aims to narrow the budget gap to a seven-year low of 4.1 percent of gross domestic product in the 12 months through March 2015.

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                               11.0300
30 Day                          12.5929
90 Day                         13.3549
180 Day                       14.0773
USD 1 Month             0.1530
USD 2 Months           0.1990
USD 3 Months           0.2306
USD 6 Months           0.3232
USD 12 Months         0.5411

Benchmark yields
Tenor     Maturity       Yield (%)

91d            15-Jan-15         11.29
182d          23-Apr-15        11.60
364d         03-Sep-15         11.67
2y              16-Aug-16         12.61
3y              31-Aug-17          12.70
5y              29-Jun-19         12.74

Indicative Currency Exchange Rates
Bid         Offer

USDNGN        165.33        166.03
EURUSD         1.2590        1.2792
GBPUSD         1.5966         1.6168
USDJPY          106.91         106.94
USDCHF         0.94545      0.9556
GBPEUR         1.2558        1.2762
USDZAR         10.9404     11.1438
JPYNGN         154.5897    154.6903
CHFNGN        173.24        174.92
EURNGN        209.17        210.53
GBPNGN         205.52       206.92
ZARNGN           13.94         15.87

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