A Review of the Nigerian Energy Industry

Financial market products & services update

Forex trading21 November 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigerian President Goodluck Jonathan proposed to cut fuel subsidies in half in a bid to reduce spending after a retreat in global crude prices. The government of Africa’s biggest oil producer plans to reduce fuel subsidies next year to 458.6 billion naira ($2.6 billion) from 971.1 billion naira, Senate President David Mark, said yesterday in the capital, Abuja at a revised 2015 Medium Term Expenditure Framework and Fiscal Strategy Paper

COMMODITIES: Brent and West Texas Intermediate headed for their first weekly advance since September as analysts remain divided on whether OPEC will cut production to support prices that are in a bear market. Half of the 20 analysts surveyed by Bloomberg News predict the Organization of Petroleum Exporting Countries will reduce output, while the rest expect no change.

EUROPE: Britain abandoned a bid to overturn a European Union ban on banker bonuses of more than twice fixed pay after it suffered a setback in the EU’s top court. Chancellor of the Exchequer George Osborne said he wouldn’t “spend taxpayers’ money” pursuing the legal challenge any further after Britain’s arguments were rebuffed by a senior official at the EU Court of Justice yesterday. The U.K. government will instead redirect its efforts toward countering the effects of the “badly designed rules,”

which include an increase in bankers’ overall pay, Osborne said in a statement.

CHINA: China’s stocks rose, erasing a weekly loss, amid speculation the government is taking steps to prevent a cash crunch before initial public offerings next week Industrial & Commercial Bank of China Ltd., the nation’s biggest listed lender, climbed for the first time in five days.

Citic Securities Co. and Haitong Securities Co. advanced at least 6 percent to lead a rally for financial companies. Eleven companies will sell IPO shares next week, seven of them on Monday. The new share sales will probably freeze about 1.6 trillion yuan ($261 billion), according to analyst estimates.

FX: Yet another record low for NGN yesterday, hitting 177.35 intraday as CB’s decision to hike RDAS’ marginal rate by nearly 200 points on Wednesday spooked the already pressured interbank market while the ASI remained under pressure, dropping a further 2.1% yesterday as Brent crude flirted with 4 year low during the day as well. As such, USDNGN continued its recent trend, testing new highs despite intermittent CB intervention on another volatile day. The pair closed at 176.05/15 after trading a 174.20-177.35 range

FIXED INCOME: Yields in the T-Bills market dropped yesterday as demand trickled into the market. OMO maturity yesterday of about 200bn might have been one of the reason from clients who needed to re-invest. Bonds had a zero sum gain as the yield inched up on the short end, while the long end dropped for the second day running. There were pockets of demand from Pension funds while market traders were covering short positions.

Macro economic Indicators
Inflation rate (YoY) for Oct. 2014                             8.10%
Monetary Policy Rate current                                  12.00%
FX Reserves (Bn $) as at November 13 2014        37.549

Money Market Highlights

O/N                            18.2500
30 Day                       15.5304
90 Day                       15.9749
180 Day                     16.8111
USD 1 Month            0.1550
USD 2 Months          0.2055
USD 3 Months          0.2329
USD 6 Months          0.3287
USD 12 Months        0.5618

Benchmark yields
Tenor       Maturity       Yield (%)

91d              12-Feb-15        12.82
182d           07-May-15       12.76
364d           03-Sep-15        12.71
2y                16-Aug-16        13.81
3y                27-Apr-17        13.84
5y                29-Jun-19        13.62

Indicative Currency exchange Rates
Bid         Offer

USDNGN            176.45         177.15
EURUSD             1.2450         1.2652
GBPUSD             1.5588         1.5790
USDJPY              117.62          117.65
USDCHF             0.95265      0.9628
GBPEUR             1.2398         1.2602
USDZAR             10.8542       11.0576
JPYNGN             150.0597     150.1603
CHFNGN            183.80        185.48
EURNGN           221.22         222.58
GBPNGN            276.25        277.65
ZARNGN             14.93          16.85

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