A Review of the Nigerian Energy Industry

Financial market update

30 January 2012, Sweetcrude, Lagos – Local and international financial market update.
US : Valuations for US Equities have been stuck below the five decade average for the longest period since Richard Nixon’s presidency. A sign investors don’t trust earnings even after a three year bull market. The S&P trades for 13.7 times profits. It was last above the mean valuation since 1954 on May 13, 2010.

INDIA: Indian rupee fell on speculation some companies are taking advantage of the currency’s rise to increase dollar purchases to meet bill payments at month end. The rupee touched a 11 week high at the end of last week and strengthened more than 7% this year.

CHINA: China signaled caution toward more monetary loosening by holding off on a reduction in bank reserve requirements that some economists had predicted. The central bank aims to ease policies prudently and pace loan growth at the beginning of the year so at to avoid a replay of credit explosion seen in 2009 and 2010

NIGERIA: AMCON has recovered over N400 billion owed the banks. The corporation had come under criticism for failure to recover the debts since it was established. Mustapha Chike-Obi said the corporation recovered a total of N400billion last year, and plans to recover N1 trillion this year. He added that debtors were coming forward without being prompted, to pay up or restructure their debts. Impressed by this development, and to save itself the cost of litigation, AMCON is yet to go all out to acquire the collateral of the debtors.

Bonds – Liquidity continued to build on the long end of the curve on Friday with the focus of the day trading on the 2018 and 1019 maturities. The 2018 being the highest yielding security currently trading, some demand fed into this security pulling it down 30bps while the 2019 went the other way going down 18 bps.

Bills – light sell off in early trading on Friday, some caution ahead of Monday’s MPC meeting. Rates up about 20bps on average across the tradable maturities

Money Market – OBB & unsecured rates are trading up another 100bps to 15.00% & 16.50%. Liquidity is still thin and the market continues to expect the inflow from FAAC.

                            Hi               Low           Close         Prev.Close
USD/NGN    161.08/18   160.42/52    160.90/00   160.58/68

NIBOR(%)                         LIBOR (%)
O/N                  16.0000        USD 1 month           0.2700
7 Day                16.2917          USD 2 month          0.4025
30 Day              16.5833         USD 3 month          0.5511
60 Day              16.8750         USD 6 month          0.7853
90 Day              17.1250          USD 12 month         1.0992
Y/Y Consumer Inflation December 2011 :               10.30%
FX Reserves: 26 January 2012                    (USD bn) 34.35
MPR                                                                                12.00%
Source: FMD and CBN

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