A Review of the Nigerian Energy Industry

Financial market update

20 December 2011, Sweetcrude, Lagos – Local and international financial market update.
· INDIA – India’s steel demand this financial year may grow at a pace faster than estimated as a possible drop in borrowing costs spurs usage of the allow. Consumption may climb 8.5 percent in the 12 months to March 31 as a revival in the construction of homes and public works projects boosts sales next quarter.

· EUROPE – The President of the European Central Bank said his institution is seeking ways to keep the eurozone’s bailout fund effective even if France and other countries lose their AAA-rating. He was speaking to lawmakers at the European Parliament just as the EU Finance Ministers were trying to figure out how to come up with up to EURO200 billion in new loans for the International Monetary Fund.

· USA –
the Upper and Lower Houses seem to be on a collision course as Senate Majority Leader Harry Reid said the Senate won’t renegotiate a bill extending payroll tax cuts and jobless benefits unless the House first approves a bipartisan version that House Republicans strongly oppose

· Economic / Central Bank News

The DMO has put Nigeria’s total debt as at the end of September this year, at $40 billion. Director-General, DMO, however allayed fears that the country’s debt profile had risen astronomically. A breakdown of the figure, showed that the country’s total external debt stood at $5.6 billion, its domestic debt was N5.3 trillion ($34.4 billion). He argued that the total debt figure at 19.6% of the nation’s GDP was sustainable.

· Bonds –
It was a quiet market yesterday. Yields went up across the curve as the trend turned slightly bearish. Market activity is expected to continue to be relatively muted over this festive season and in the run up to the New Year.

· Bills – Quiet in the bill market as well, as the year winds down. Short dated bills continued to dominate most of the activity on Monday.

· Money Market – OBB stable at 14.00% with unsecured rates up 50bps to start the week at 16.50%

· NGN: CBN offered and sold $200mio, demand $217.17mio lowest intervention rate 158.2670 (1% inclusive). rate has been maintained for the last four auctions now.

Hi                Low             Close         Prev.Close
    162.31/41      161.40/50    162.22/32    161.50/60

NIBOR(%)                             LIBOR (%)
O/N             16.5670             USD 1 month          0.2874
7 Day           16.6330            USD 2 month          0.4155
30 Day        17.1670             USD 3 month          0.5670
60 Day        17.6250             USD 6 month          0.7945
90 Day        17.7920             USD 12 month         1.1144
Y/Y Consumer Inflation Oct 2011 :                        10.50%
FX Reserves: 15 December 2011            (USD bn) 33.152
MPR                                                                               12.00%
Source: FMD and CBN

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