A Review of the Nigerian Energy Industry

Financial market update

31 January 2012, Sweetcrude, Lagos – Local and international financial market update.
EUROPE : European governments moved towards a confrontation over a second rescue package for Greece
just as a dimming fiscal outlook in Portugal opened a new front in the debt crisis. Euro leaders left a Brussels summit with no accord over hot to plug Greece’s widening budget hole and German Chancellor Angela
Merkel voicing frustration with Athens government’s failure to carry out an economic makeover.

INDIA: Indian Rupee is was set for a record monthly gain as foreign funds stepped up purchases of the nation’s
assets after the currency plunged 16% in 2011. The rupee has advanced 6.9% against the USD this month as
equities seem cheap and bond yields are attractive.

NIGERIA: CBN’s Monetary Policy Committee (MPC) commenced its first meeting for the year on Monday, it is expected to unveil the monetary policy direction for the year at the end of the two-day meeting on Tuesday. The first since the partial removal of petrol subsidy, would also provide the committee members the opportunity to review the current subsidy regime and its implication on the economy. The apex
bank had adopted series of stringent monetary policy tools last year in its ambition to achieve single digit inflation and exchange rate stability.

Bonds – Newly issued 10yr paper 16.39% FGN JAN2022 was listed in the secondary market on Monday, traded 12bps lower from coupon rate to close at 16.27%, market expects a hold on MPR rate at this meeting and as such no selling interest was recorded in yesterday’s session. Liquidity remains tight in the system as FAAC funds are yet to be disbursed this accounts partly for the low demand on bonds seen in the last two weeks.

Bills – Bill yields traded flat on Monday ahead of the MPC meeting which started today, same trend expected on today while we await pronouncements on the outcome of the meeting.

Money Market – OBB rate off 150bps to 14.00% due to liquidity at the CBN Reverse-Repo window, O/N maintained
at 16.00%. Market still expects the disbursement of monthly statutory fund.

NGN: CBN offered and sold $250mio, depreciated 20 points to 158.6205 (inc. the 1% commission charged by
the CBN).

                               Hi                      Low               Close                 Prev.Close
USD/NGN   161.58/68            161.00/10       161.25/35          161.00/10

NIBOR(%)                              LIBOR (%)
O/N               15.0000           USD 1 month           0.2678
7 Day             15.5000           USD 2 month           0.3983
30 Day          16.0000           USD 3 month           0.5469
60 Day          16.4170            USD 6 month           0.7815
90 Day          16.6670           USD 12 month          1.0975
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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