A Review of the Nigerian Energy Industry

Financial market products & services update

Financial markets29 October 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Federal Government expects to earn $1.3 billion from cocoa exports this year, an increase of 45 percent on two years ago, after a steady rise in output that could help shift Africa’s top economy away from its reliance on oil. Agriculture minister, Akinwumi Adesina, who spoke on the sidelines of a cocoa summit in Nigeria’s capital Abuja, said the world’s fourth biggest cocoa producer was set produce 370,000 tonnes this year from its 14 major producing areas, up from the 250,000 tonnes that earned it $900 million in 2012.

FIXED INCOME: The recent calm in markets has ushered in lacklustre trading sessions. Bonds and tbill market were a touch wider, with little to no movement. As expected, another OMO auction yesterday (liquidity up NGN665billion) with stop rate unchanged at 11.55% yield – NGN71.7billion sold. Tbill auction next week should spur some activity in the tbill market. On offer will be NGN45.17bn 91day, NGN30bn 182day and NGN47.78bn 364day.

FX: The pair further weakened yesterday, closing at 165.57/67 from a 165.02/12 open. Yesterday’s price action was mainly driven by bids from few locals, with offshore participation still relatively quiet, though the All Share Index slipped 1.13% yesterday to close at 38.3k points while Bonny Light crude price remained relatively unchanged.

USA: The U.S. Federal Reserve on Wednesday is expected to shutter its bond-buying program, closing one controversial chapter in its crisis response even as it struggles to manage a full return to normal monetary policy. The Fed is likely to announce at the end of a two-day meeting that it will no longer add to its holdings of Treasury bonds and mortgage-backed securities, halting the final $15 billion in monthly purchases under a program that at its peak pumped $85 billion a month into the financial system.

CHINA: China can cut its economic growth target to 7 percent next year without hurting its labour market, the World Bank said on Wednesday even as it urged Beijing to get rid of rigid growth objectives. At its thrice-yearly review of the Chinese economy, the World Bank warned China against carrying its “ambitious” 2014 economic growth target of 7.5 percent into next year, saying that such a move would detract from the government’s reform plans.

West Texas Intermediate crude rose for a second day on speculation that fuel demand is increasing amid signs of an improving economy in the U.S., the world’s biggest oil consumer. WTI for December delivery rose as much as 56 cents to $81.98 a barrel in electronic trading on the New York Mercantile Exchange and was at $81.91.

Macro economic Indicators
Inflation rate (YoY) for Sept. 2014                  8.30%
Monetary Policy Rate current                          12.00%
FX Reserves (Bn $) as at October 27 2014    38.863

Money Market highlights

O/N                               10.6250
30 Day                          12.5182
90 Day                          13.3194
180 Day                        14.1879
USD 1 Month               0.1535
USD 2 Months            0.1975
USD 3 Months            0.2326
USD 6 Months            0.3239
USD 12 Months          0.5416

Benchmark Yields
Tenor        Maturity        Yield (%)

91d               22-Jan-15         9.98
182d             23-Apr-15        10.84
364d             03-Sep-15        11.59
2y                 16-Aug-16         12.41
3y                 27-Apr-17          12.56
5y                 29-Jun-19         12.74

Indicative Currency Exchange Rates
Bid          Offer

USDNGN        164.65      165.35
EURUSD        1.2637       1.2839
GBPUSD         1.6039      1.6241
USDJPY          108.08      108.11
USDCHF        0.94165    0.9518
GBPEUR        1.2568       1.2772
USDZAR        10.7498     10.9532
JPYNGN        152.6897   152.7903
CHFNGN       174.12        175.80
EURNGN      209.60        210.96
GBPNGN       266.61       268.01
ZARNGN         14.30         16.22

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