A Review of the Nigerian Energy Industry

Financial market update

21 November 2011, Sweetcrude, Lagos – Local and international financial update
· USA – The USD and the JPY rose against most of their major counterparts on demand for safer assets after a Democratic aide said a US congressional committee is likely to announce today it failed to agree on deficit cuts.

· INDIA – Indian stocks fell for eight day on concerns in the US and the Euro Zone. The BSE Sensex fell 4.8% last week and the INR fell to 51.34 per USD, its lowers since March 2009.

· CHINA – The yuan snapped a two day decline after Premier Wen Jiabao said that China will push forward with exchange rate reforms. The Yuan reached a 17 year high of 6.3354 per USD on Nov 14

· President Goodluck Jonathan is unlikely to present the 2012 federal budget anytime soon, if the issue of fuel subsidy removal is not resolved. The National Assembly had asked the president to shelve the plan to remove oil subsidy which the president resisted and insisted that he was anchoring the presentation of the 2012 budget on the removal of the oil subsidy, stating the government believes this would free up some money for the executive to implement the new Appropriation Bill.

· Bonds – Auctioned 7yr 10.70% FGN MAY2018 was the toast of the market today. Buying interest shown at this level closed it 50bps lower to 15.57% at Friday’s session. Demand remains very low on the 2yr and 3yr bonds sustaining it’s yields at higher levels to the long-dated bonds. MPC meeting early next week is expected to chart the direction of the market into early next year.

· Bills – A slight sell-of on bills on Friday with yields up 15 – 20bps. Demand seem to have declined on various tenors of bills just ahead of the MPC meeting starting early next week. market expects a 25 – 50bps hike.

· Money Market – OBB up another 50bps to 15.00% while unsecured moved 100bps up to 17.00%, which opened the week at 12.00% and 13.50% respectively. Liquidity levels continue to drop and expected to stay tight in the coming week.


                                     Hi               Low               Close               Prev.Close

USD/NGN        159.01/11        158.45/55     158.52/62      158.55/65

NIBOR%                                 LIBOR (%)
O/N                     16.95800       USD 1 month        0.25660
7 Day                   17.25000       USD 2 month        0.36880
30 Day                17.50000       USD 3 month        0.48780
60 Day                17.75000        USD 6 month       0.69860
90 Day                18.08300       USD 12 month      1.01810
Y/Y Consumer Inflation Oct 2011 :                           10.50%
FX Reserves: 15 November 2011               (USD bn) 33.01
MPR                                                                                12.00%
Source: FMD and CBN

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