A Review of the Nigerian Energy Industry

Financial market products & services update

Currency notes, coins & gold bars.
Currency notes, coins & gold bars.

09 January 2015, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: The Asset Management Corp. of Nigeria plans to begin the sale of Keystone Bank Ltd., the biggest of three lenders nationalized after a 2009 financial crisis, in the second quarter after general elections next month. “We chose to start in the second quarter to allow for elections to come and go,” Mustafa Chike-Obi, chief executive officer of state-owned Amcon, said by phone yesterday. “By that time everything has returned to normal”. The sale will be transparent and Amcon will call for bids with a selection process lasting three to four months and ending this year, Chike-Obi said.

FX: Market was awash with significant LHS liquidity from USD sales from oil majors including whispers of state owned oil company offering over $250 mio. We continue to see some NGN appreciation despite price action on equities this week [ASI 33.9 to 30.90…9% drop so far this week] on the back offshore divesting ahead of elections with oil looking softer, as the oil companies’ flows continue to drive market sentiment.

FIXED INCOME: Tbill yields continued to ease again given high excess liquidity in the system. Yesterday was largely quiet in both Tbill and bond space. Muted reaction in the Tbill market after Wednesday’s PMA as an OMO auction was announced. Liquidity will continue to be the main driver in Tbills while bond market will be muted till after the auction. O/N rates sub 10%.

USA: An improving job market is the driving force behind a rebound in American consumer confidence that will probably help propel faster economic growth in 2015. The Bloomberg Consumer Comfort Index increased to 43.6 in the week ended Jan. 4, the highest level since October 2007, from 42.7 the period before, according to data issued yesterday. Another report showed fewer workers filed for unemployment benefits last week, indicating employers are holding on to seasonal hires

CHINA: China’s benchmark money-market rate fell for a fifth day as the central bank extended a pause in open-market operations amid an abundant cash supply.

The People’s Bank of China didn’t sell any repurchase or reverse-repo contracts yesterday, according to two traders at primary dealers required to bid at the auctions. The monetary authority last conducted such operations, which it normally does twice a week, on Nov. 25, data compiled by Bloomberg show. As much as 2.2 trillion Yuan ($354 billion) may be locked up next week due to 20 initial public offerings.

COMMODITIES: World food prices tracked by the United Nations slid to a four-year low last month as costs fell for foodstuffs from sugar to milk. The strengthening of the U.S. dollar against other currencies is curbing importers’ demand for products including meat and grain priced in greenbacks, the UN’s Food & Agriculture Organization said in a report on its website yesterday. At the same time, the plunging price of crude oil has reduced demand for crops including sugar and palm oil used in biofuel, it said.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   7.90%
Monetary Policy Rate current                            13.00%
FX Reserve (Bn $) as at December 31 2014    34.477

Money Market Highlights
O/N                                   9..9167
30 Days                            13.8100
90 Days                            14.2448
180 Days                          15.7018

USD 1 Month                   0.1663
USD 2 Months                 0.2142
USD 3 Months                 0.2521
USD 6 Months                 0.3604
USD 12 Months               0.6289

Benchmark Yields
Tenor     Maturity      Yield (%)
91d            09-Apr-15        11.10
182d          25-Jun-15        14.28
364d         17-Dec-15         16.05
2yr            16-Aug-16         15.34
3yr            27-Apr-17          15.34
5yr            23-Oct-19          15.36

Indicative Currency Exchange Rates
                         Bid         Offer
USDNG         176.00     183.00
EURUSD      1.1676      1.1899
GBPUSD      1.4996      1.5198
USDJPY       119.34       119.37
USDCHF      1.1305      1.0232
GBPEUR      1.2694      1.2898
USDZAR      11.4776     11.6810
JPYNGN         N/A          N/A
CHFNGN        N/A          N/A
EURNGN        N/A          N/A
GBPNGN         N/A         N/A
ZARNGN         N/A         N/A

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