A Review of the Nigerian Energy Industry

Financial market update

3 November 2011, Sweetcrude, Lagos – International news
· USD – The dollar slid against 11 of its 16 major peers as economic reports this week may show the US recovery is faltering, adding to speculation Federal Reserve policy markets will signal their willingness to embark on more asset purchases or quantitative easing as they conclude a two day meeting today.

· EUR – The Euro weakened against the dollar falling toward a three week low as European leaders said, Greece’s referendum on a bailout deal will determine whether it will stay in the 17 National Currency union.

· CNY – The Chinese Yuan advanced the most in a week as the central bank set a record daily reference rate and signalled before the group of 20 summit that it will increase moves in the exchange rate. The reference rate was set 0.16% stronger at 6.3198 per USD

· Within a year from now, the $1.5 billion credit facility the U.S. Ex-Im Bank has offered Nigeria will become available to fund reform in the electricity sector. The U.S. bank’s Regional Director for Africa, Rick Angioni, said in Washington DC that the first release of the funds “would hopefully be starting next year,” adding that “the release of the facility would be done case by case as the power projects come on stream.” [Guardian].

· Bonds – Largely stable market yesterday, some bursts of volatility intra day. The expectation of the FAAC flows might push some demand into the market pushing rates down.

· Bills – The sell off continued again yesterday, with rates up about 15-30 bps across all the maturities. With liquidity tight some players are trying to raise some through the bill market.

· CBN offered and sold $180mio against a demand of $262.96mio, lowest intervention rate 152.2373(1% inclusive),depreciation of 69kobo from the last auction.

NIBOR(%)                                LIBOR (%)
O/N           17.1667                   USD 1 month             0.2453
7 Day         17.5417                   USD 2 month            0.3369
30 Day      17.9167                   USD 3 month            0.3081
60 Day      18.2917                   USD 6 month            0.4989
90 Day      18.5417                   USD 12 month          0.9416
Y/Y Consumer Inflation Sep 2011 :                            10.30%
FX Reserves: 27 October 2011                       USD33.02bn
MPR                                                                                  12.00%

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