A Review of the Nigerian Energy Industry

Financial market update

13 December 2011, Sweetcrude, Lagos – Local and international financial market update.
· INDIA – Addressing the Parliament, Finance Minister Pranab Mukhejee said this morning that there was no policy paralysis in the government functioning. He vehemently stated that the Indian economy was strong and that the real issue staring at the country was the recession in Europe.

· USD – The US Dollar weakened against the yen and the euro. The U.S. currency slid 0.3 percent to 77.72 yen this morning . Against the 17-nation euro, it depreciated 0.2 percent to $1.3208

· CHINA – China’s stocks fell to their lowest level in more than two years, after Chinese housing sales slumped and ratings companies said last week’s European summit did little to resolve the region’s debt crisis.

· Economic / Central Bank News

Nigeria’s economy is the fourth fastest growing worldwide, according to Richard Sandock of the World Bank. He listed other countries that recorded significant growth in their economies to include the BRIC countries – Brazil, Russia, India China, Speaking at the Seventh National Conference on Investment in Abuja at the weekend, Nigeria has slowly been coming up and has finally taken over from Russia and South Africa. As the second quarter of 2011, the country’s economy had grown by 7.72% and is projected to hit 7.98% by the end of the year.

· Bonds – Market opened buying across the 2013s and 2014s today as yields dipped across the curve today. Some players attempting to make last ditch investments ahead of year end.

· Bills – The market continued to be bullish today for most maturities ahead of a slowdown in market activity. With the common year end some banks would rather show investment in liquid assets over idle cash balances and so a lot of demand is feeding into the short dated maturities especially. A slight sell off as profit takers emerge on some maturities that had been knocked down.

· Money Market – OBB stable at 15.00% but unsecured rates went up 50bps to 17.50% as liquidity thins out somewhat.

· NGN: CBN offered and sold $200mio, total demand was $248.62mio. CBN cut-off rate was 156.70

                         Hi                 Low                  Close              Prev.Close
USD/NGN  162.25/35      161.95/05          162.15/25         161.70/80

NIBOR(%)                               LIBOR (%)
O/N                17.1667             USD 1 month            0.2776
7 Day              17.3330            USD 2 month            0.4014
30 Day           17.6670            USD 3 month            0.5435
60 Day           17.9580            USD 6 month            0.7645
90 Day           18.1670            USD 12 month           1.0874
Y/Y Consumer Inflation Oct 2011 :                            10.50%
FX Reserves: 08 December 2011               (USD bn) 33.144
MPR                                                                                  12.00%
Source: FMD and CBN

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