A Review of the Nigerian Energy Industry

Financial market products & services update

A compass, investment analysis and currency notes.
A compass, investment analysis and currency notes.

16 January 2015, Sweetcrude, Houston – Local and international finacial market products and services update.
NIGERIA: Nigeria’s mid-crop cocoa output is threatened by dry winds from the Sahara Desert that have evaporated moisture and caused buds to break off trees, a farmers’ group said.

Nigeria, the world’s fourth-largest producer of the chocolate ingredient behind Ivory Coast, Ghana and Indonesia, set a target to produce at least 500,000 tons of cocoa by the end of the season running through September 2015 as more trees got to an age where they produce the beans. Nigeria produced 350,000 tons of cocoa in the 2013-2014 seasons, according to the Agriculture Ministry. The International Cocoa Organization assessed Nigeria’s production for that season at 240,000 tons.

FX: Market was active yesterday; we saw a spike in volatility yesterday – partly due to the smaller $100k tick size. The rumour of CBN’s presence ensured the rates didn’t go beyond the 186.00 levels, but likely we push for a test further north today bar any major oil flow as the RHS pressure persists since the re-opening of 2 way trading market.

FIXED INCOME: First sell off in T-bills for the year happened yesterday. Even though liquidity remains in excess of NGN500bn, sell-off was triggered by the OMO auction as the CBN had stayed out of the market all week and some levels were looking a little overdone. Stop rate at OMO remained unchanged at 14.20% discount with NGN169bn sold. T-bill auction next week with all three tenors on offer.

CHINA: Copper led a rebound in base metals after slumping to the lowest in more than five years as credit growth surged in China.

The metal found in everything from car wiring to plumbing rallied after sliding yesterday to the weakest since July 2009 amid speculation China’s copper demand growth is slowing. Data showing a stronger-than-expected increase in financing last month triggered a jump in Chinese equities and prompted speculation that the sell-off in metals was excessive.

EUROPE: The euro is shaping up as the biggest casualty of Switzerland’s decision to scrap its currency cap.

Soon after the Swiss National Bank unexpectedly decided yesterday to end its three-year policy of keeping the franc from appreciating beyond 1.20 per euro, bearish bets on Europe’s common currency soared. While setting a record low Vs the franc, the euro also plunged 3.5% against a basket of 10 developed-nation peers, the most since its 1999 debut.

COMMODITIES: Copper headed for the biggest weekly drop in more than three years after a rout driven by lower energy costs and on speculation demand will weaken in China, the world’s largest metals user. The metal fell 7.4% this week after tumbling to the lowest since 2009. Copper is the worst performing metal so far this year on the Bloomberg Commodity Index, which tumbled to the weakest in 12 years this week amid the World Bank cutting its forecast for global growth, citing economic slowdown in Europe and China.

Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014                   8.00%
Monetary Policy Rate current                          13.00%
FX Reserve (Bn $) as at January 09 2015     34.518

Money Market Highlights
O/N                                 9.9583
30 Days                         13.3641
90 Days                         14.5491
180 Days                       15.9889

USD 1 Month                0.1680
USD 2 Months              0.2142
USD 3 Months              0.2526
USD 6 Months              0.3564
USD 12 Months            0.6149

Benchmark Yields
Tenor     Maturity     Yield (%)
91d           09-Apr-15       11.31
182d         25-Jun-15       15.15
364d        07-Jan-16       15.55
2yr           16-Aug-16       15.04
3yr           31-Aug-17       15.25
5yr           23-Oct-19       15.32

Indicative Currency Exchange Rates
                      Bid            Offer
USDNG       180.00        186.00
EURUSD    1.1528          1.1730
GBPUSD    1.5101           1.5303
USDJPY     116.54          116.57
USDCHF    0.86895      0.8791
GBPEUR    1.2970         1.3174
USDZAR    11.4321        11.6355
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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