A Review of the Nigerian Energy Industry

Financial market update

24 January 2012, Sweetcrude, Lagos – Local and international financial market update.
EUROPE : EU Finance Ministers balked at putting up more public money for Greece calling on bondholders to provide greater debt relief. EU stood by an October offer of EUR130bn for a second Greek aid package subject to existing investors agreeing to an interest rate of 3% to 3.5% as opposed to the 4% they are requesting for.

INDIA: India unexpectedly cut the reserves ration for the first time since 2009 and signaled future interest rate cuts. The ratio was reduced to 5.5% from 6%. The move would add around INR320 bn into the commercial banks. Brazil, China and Russia have either cut borrowing costs or reduced lenders reserve requirements in recent weeks as the debt crisis in Europe saps global demand.

MIDDLE EAST: EU Ministers agreed to ban oil imports from Iran starting July 1 to ratchet up pressure on its nuclear program. They will freeze assets in Europe of the Iranian Central Bank as well as of eight other entities and bank trade in gold, precious metals, diamonds and petrochemicals from Iran.

Bonds: The market continues to trade relatively stable, continued demand feeding into the short end of the curve. First bond auction for the year comes up on Wednesday and this will help stimulate the long end of the curve which has been very quiet in the last few trading days.

Bills: Some buying in early trading yesterday due to expected inflows of liquidity, light profit taking mid afternoon pushing the rates back up though at the close rates were still down about 15 – 20bps on a daily. Expected slowdown in market ahead of Wednesday’s auction which will likely close higher than current secondary market levels.

Money Market: OBB & unsecured rates are stable at 14.00% & 14.50% FAAC flows are expected in early next week after being approved earlier in the week.

WDAS: CBN offered and sold $250mio, lowest intervention rate 158.5700 (1% inclusive) representing a 15kobo depreciation from the last auction.

                             Hi                Low               Close             Prev.Close
USD/NGN   161.30/40   160.85/95  161.20/30  160.85/95

NIBOR(%)                           LIBOR (%)
O/N                 14.2083    USD 1 month           0.2763
7 Day              14.5833    USD 2 month           0.4082
30 Day           14.9167     USD 3 month           0.5601
60 Day           15.3333     USD 6 month           0.7928
90 Day           15.8750    USD 12 month          1.1100
Y/Y Consumer Inflation December 2011 :     10.30%
FX Reserves: 16 January 2012           (USD bn) 33.72
MPR                                                                                12.00%
Source: FMD and CBN

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