A Review of the Nigerian Energy Industry

Financial market products & services update

finance05 December 2014, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Newly elected President of Organisation of Petroleum Exporting Countries (OPEC), Diezani Allison-Madueke, has disclosed her plan to convene a meeting of the organisation early January to find drastic solution to dwindling oil price if the trend continues. Diezani, who is Nigeria’s Minister of Petroleum Resources, said even before that happens, Nigeria will start re- strategising its production and marketing abilities in order to remain competitive and attract a bigger slice of the end users of petroleum products. She also described her election to head the oil cartel as having come at a very challenging and critical time because of the unfortunate intrigues among some oil-producing nations, which has left some other less fortunate producers in distress.

FX: Same trend as has been seen all week, market initially opened at 179.90/ 180.00 and closed at 179.80/ 90 level. Although CBN has psychologically capped the rates at the 181.00 level due to the frequent direct intervention that has been going on all week. Market now daily anticipates these flows and are trading cautiously. Saw a swing in Brent oil prices yesterday from open of 70.60 to a low of 68.81, however that wasn’t enough to cause any panic. Expect same sequence to occur today where we remain bid at open.

FIXED INCOME: Net selling from street yesterday on the back of the auction results keeping the entire complex weaker. Lots of tbills sitting pretty on the 14% handle with 25 dec bill touching 15% yield intraday. Sell off remains a bit muted in the 1year space due to liquidity reasons. Even after opening at NGN309bn, liquidity in money market very tight on Thursday with O/N rates touching 30% on the back of RDAS funding by banks, CRR debit (private sector) and further debit by the CBN after their examination of public sector deposits revealed that some deposits had been understated. New one year bill 03 dec 2015 free to trade from Friday.

COMMODITIES: Brent extended losses from a four- year low as Saudi Arabia offered customers in Asia record discounts on its crude, bolstering speculation it’s defending market share. Brent for January settlement slid as much as 52 cents to $69.12 a barrel on the London-based ICE Futures Europe exchange and was at $69.32 at 3:55 p.m. Singapore time.

CHINA: China’s stocks capped the steepest weekly rally since 2009 in a volatile session that spurred the benchmark index’s biggest swings in four years and sent turnover above 1 trillion yuan ($163 billion) for the first time. The Shanghai Composite Index rose 1.3 percent to 2,937.65 at the close, after gaining as much as 2.7 percent and falling 3 percent.

EUROPE: Mario Draghi has seven weeks to build consensus among policy makers on a stimulus package following a fractious end to 2014. After refraining from quantitative easing for the euro area in yesterday’s Governing Council meeting, the European Central Bank president has pledged to “reassess” the situation early next year. The council expects to consider a proposal for broad- based asset purchases including sovereign debt at the next monetary-policy meeting on Jan. 22, said two euro-area central- bank officials familiar with the deliberations. With inflation already at a five-year low and the rate now being further undermined by a slump in oil prices, pressure will remain on policy makers to consider expanding stimulus.

Macro Economic Indicators
Inflation rate (YoY) for Oct. 2014                      8.10%
Monetary Policy Rate current                            13.00%
FX Reserves (Bn $) as at December 3 2014    36.579

Money Market Highlights

O/N                             21.0833
30 Day                        15.0245
90 Day                        15.3885
180 Day                      16.0103
USD 1 Month             0.1572
USD 2 Months           0.2020
USD 3 Months           0.2353
USD 6 Months           0.3299
USD 12 Months         0.5750

Benchmark Yields
Tenor       Maturity        Yield (%)

91d              05-Mar-15        13.38
182d           14-May-15         14.52
364d           03-Sep-15         14.34
2y                16-Aug-16         13.80
3y                27-Apr-17         13.84
5y                29-Jun-19        13.85

Indicative Currency Exchange Rates
                           Bid       Offer
USDNGN         180.43     181.13
EURUSD          1.2269     1.2471
GBPUSD          1.5547      1.5749
USDJPY           120.25      120.28
USDCHF          0.96685   0.9770
GBPEUR          1.2548      1.2752
USDZAR          11.1194      11.3228
JPYNGN          150.2797   150.3803
CHFNGN         185.12        186.81
EURNGN         222.94      224.30
GBPNGN         282.15       283.54
ZARNGN           15.15         17.07

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