A Review of the Nigerian Energy Industry

Financial market update

11 November 2011, Sweetcrude, Lagos – International news
· JPY – The yen rose to the strongest against the dollar since Japan’s government intervened on Oct 31 to weaken its as concerns Europe’s spreading debt crisis will dent global growth spurred investors to seek haven assets.

· EUR – The EUR came of its lows as Italy pulled bank from the brink. The turnaround came aftger a successful Italian bond auction where Italy paid higher than normal but a big cover was almost 2:1. It could however be that the ECB purchased a large amount of the bonds thought the ECB will only report its bond purchases on Monday

· EUR – The bond market rates Portugal’s creditworthiness at least six steps lower than either Moody’s or S&P does. Suggesting lower ratings ma be on the horizon for Europe’s most indebted nations.

· The hope of boosting the economic development of the country through Foreign Direct Investment, will soon become a reality, as the Lekki Free Trade Zone, LFTZ, commences full operations next year. The FG, through Olusegun Aganga, minister, Trade and Investment, while on a visit to the trade zone at the weekend, assured Nigerians that plans had been concluded to ensure that the LFTZ commence full operations before 2012.

· Bonds –
Yields rallied yesterday with some demand feeding into the market across the curve. With the money market long naira liquidity some confidence in current yields comes as some market participants see some value in the current yield curve.

· Bills – With a few participants loosing out at the primary auction yesterday due to issues with the CBN and bid submission and the CBN refusing to sell a significant volume at the OMO auction a lot of that demand fed into the secondary market yesterday. Rates came off an average 70 bps across most of the curve out to 182days while the much longer tenors dipped only about 15-20bps.

· Money Market – OBB stable at 12.00% with unsecured rates also stable at 13.00% as the FAAC flows pushed rates down. With the CBN offering OMO bills in an attempt to mop up liquidity.

NIBOR%                                 LIBOR%

O/N              13.91700           USD 1 month              0.24790
7 Day            14.41700           USD 2 month             0.34510
30 Day         15.33300           USD 3 month             0.45280
60 Day         15.87500           USD 6 month             0.58580
90 Day         16.62500           USD 12 month           0.97640
Y/Y Consumer Inflation Sep 2011 :                              10.30%
FX Reserves: 04 November 2011                   USD32.84bn
MPR                                                                                   12.00%
Source: FMD and CBN

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