A Review of the Nigerian Energy Industry

Financial market update

7 December 2011, Sweetcrude, Lagos – Local and international financial market update.
· CHINA – China’s stocks rose on speculation recent losses were excessive and European leaders will step up efforts to contain the debt crisis. China Merchants Bank Co. And PING An Insurance (Group) Co. Led gains by financial companies.

· USA – The U.S. receives its highest rating from international investors in more than two years on new optimism that the world’s largest economy will weather the financial crisis in Europe and avoid a recession in 2012, according to a Bloomberg poll. More than two in five of those surveyed (41 percent) identified the U.S. as among the markets that will perform best over the next year.

· INDIA – India suspended its decision to allow overseas companies like Wal-Mart Stores Inc. To open supermarkets, shelving plans Prime Minister Manmohan Singh had approved to end a yearlong paralysis in policymaking. The government stalled its decision amid protests by the opposition and its allies that had forced repeated adjournments of parliament for the last week.

· Economic / Central Bank News

The contribution of a membership fee of N875 million to the International Islamic Liquidity Management Corporation (IILM) by the Central Bank of Nigeria (CBN) as a founding member, is raising questions about the apex bank’s resolve on accountability and transparency in its operations. Analysts are asking whether the compulsory contribution of $5million, (N875million) at the current exchange rate of N157/$ was approved by the Federal Executive Council, or provided for in the 2010 budget, approved by the National Assembly.

· Bonds – Quiet session for the most of yesterday, towards the close some sold off on the 2015s with some bearish sentiment across most of the curve.

· Bills – Rates went up slightly in early trading on Tuesday but with the improved liquidity situation, we saw some demand feed into the market pulling rates down an average 40bps. The auction comes up today and this will dictate the direction over the next week and in the run up to year end.

· Money Market – OBB remained stable again tonight at 14% while unsecured rates traded up at 16.50%.

Hi                Low             Close           Prev.Close
     161.52/62     161.20/30    161.50/60     161.20/30

NIBOR(%)                                 LIBOR (%)
O/N                    15.7500          USD 1 month              0.2751
7 Day                  16.1670          USD 2 month              0.3947
30 Day               16.6250          USD 3 month              0.5378
60 Day               16.9580          USD 6 month              0.7583
90 Day               17.2080          USD 12 month            1.0789
Y/Y Consumer Inflation Oct 2011 :                                10.50%
FX Reserves: 2 December 2011                       (USD bn) 32.99

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