A Review of the Nigerian Energy Industry

Financial market products & services update

Forex trading28 November 2014, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Diezani Alison-Madueke will succeed Libya’s Abdourhman Ataher Al-Ahirish as OPEC’s President next year, according to a delegate at the group, who asked not to be identified in line with policy.

Alison-Madueke is Petroleum Minister for Nigeria, Africa’s largest oil producer. She was proposed in June as a candidate for Secretary-General of the Organization of Petroleum Exporting Countries, two people with direct knowledge of the matter said. That role is currently held by Libya’s Abdalla El-Badri. The position of president is normally held for one year at a time.

COMMODITIES: Brent fell below $75 a barrel for the first time since September 2010 after OPEC left production limits unchanged at its meeting in Vienna.Crude collapsed into a bear market last month amid the highest U.S. output in three decades and signs of slowing global demand growth.

EUROPE: Mario Draghi said the European Central Bank is open to buying a wide variety of assets for further stimulus as German and Spanish inflation data highlighted the struggle to revive the euro-area economy. If current measures aren’t enough, the Governing Council is “unanimous in its commitment to use other unconventional instruments,” the ECB president said at the University of Helsinki on Thursday.

CHINA: China’s central bank refrained from selling repurchase agreements for the first time since July, loosening monetary policy further as a report showed industrial companies’ profits fell by the most in two years.

The People’s Bank of China didn’t conduct any open-market operations in Thursday’s auction window, after cutting interest rates last week for the first time since 2012. It last suspended sales of repos, which drain funds from the banking system, in the week of July 21 as initial public offerings boosted cash demand. Guotai Junan Securities Co. estimated such share sales tied up 1.6 trillion yuan ($261 billion) this week, while maturing repos injected a net 35 billion yuan.

FX: Stronger close for spot yesterday, spurred by another round of CB intervention. Market had traded relatively calm for most of the day as Wednesday’s RDAS result had an instant effect on sentiments regarding the pair. After trading sub 177 for most part of the day, late pressure turned out to be short-lived as CB’s presence ensured a 177.68 cap for the day, inspiring over 4 big fig intraday gains, trading a 173.80 low and closing just shy of 175. The CBN’s decent work in curbing the pressure on the pair is likely to be tested in the short term as OPEC’s decision not to cut production to support falling oil price had Brent testing sub $72/bbl late yesterday.

FIXED INCOME: Yields continued to struggle to find a level reflective of recent monetary policies as the tone in the secondary market proved strong. Highlight for yesterday was the OMO auction printing at 13% discount (13.86% yield) only NGN6bn sold with bid/cover at 8.8X. OMO auction result shows market hunger for higher yields and this should definitely have some impact at today’s trading.

Macro economic Indicators

Inflation rate (YoY) for Oct. 2014                          8.10%
Monetary Policy Rate current                                13.00%
FX Reserves (Bn $) as at November 25 2014     36.978

Money Market Highlights

O/N                            17.4583
30 Day                       14.5520
90 Day                       14.8578
180 Day                     15.5675
USD 1 Month            0.1550
USD 2 Months         0.2010
USD 3 Months         0.2336
USD 6 Months         0.3264
USD 12 Months       0.5646

Benchmark Yields
Tenor       Maturity       Yield (%)

91d              12-Feb-15        13.24
182d           07-May-15       12.67
364d           03-Sep-15        12.62
2y                16-Aug-16        12.70
3y                27-Apr-17        13.07
5y                29-Jun-19       13.23

Indicative Currency Exchange Rates
Bid       Offer

USDNGN      174.65      175.35
EURUSD       1.2338     1.254
GBPUSD       1.5584      1.5786
USDJPY        118.22      118.25
USDCHF      0.96155    0.9717
GBPEUR      1.2508      1.2712
USDZAR      10.9112     11.1146
JPYNGN      147.9497   148.0503
CHFNGN     180.21       181.90
EURNGN     217.01       218.37
GBPNGN      273.79      275.18
ZARNGN      14.90        16.83

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