A Review of the Nigerian Energy Industry

Financial market update

17 August, 2011, Sweetcrude, Abuja –
International News
· CNY:
The yuan slipped against the dollar on Wednesday as the central bank set its mid-point slightly weaker ahead of a visit to China by U.S. Vice President Joe Biden this week and after the fixing hit a record high for the past five sessions.

· CHF: The Swiss franc jumped on Wednesday after the Swiss National Bank announced fresh measures to drive down money market rates to stem the franc’s strength, but refrained from direct intervention or pegging the currency as some had speculated.

· ZAR: South Africa’s rand was slightly firmer against the dollar in early Wednesday trade and was expected to stay in current ranges as risk aversion appeared to ebb after debt woes in Europe and the U.S. triggered a heavy sell-off last week.

Nigeria News
· Bonds –
Yields came off in the last hour of trading in reaction to yoy inflation dipping to single digits. With the expectation of the FAAC inflow and the change in expectation of any possible hike come September, rates may come off in the secondary market. There is NGN30, 15 & 25bn on offer for the 3,5 & 7yr tenors at today’s auction.

· Bills – Rates dipped an average 15bps across board as the slight dip in inflation stimulated some buying activity. The OMO auction of 14 day bills maturing 01/09/11 cut off at 8.20% with the central bank only selling N82bio out of an offer N100bio. Short dated maturities will likely trend upward today in reaction.

· Money Market – Unsecured O/N rates are averaging 10.50% as the liquidity remains relatively thin. The FAAC funds are expected in this week which should drive rates down to 7.00%.

· Interbank/WDAS – $350m is on offer at today’s WDAS auction.

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