A Review of the Nigerian Energy Industry

Financial market update

15 March 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Share purchases by foreign investors in the Nigerian Stock Exchange rose by a significant 80% to NGN512bn (US$3.24bn) in 2011, compared with NGN381bn in 2010, the exchange revealed on March 13 via Reuters. The rise was despite an overall decline in the main stock index during the same period. In 2011 banking stocks were among the most preferred ones, but traders’ claims that domestic institutional investors, including pension funds, switched to debt in order to get higher yield in 2011.

CHINA: China is easing restrictions on lending capacity at three of the nation’s four biggest banks after new loans dropped to a four-year low, officials at the banks with knowledge of the matter said. The regulator is letting the lenders use more of their deposits to make loans, the bank officials said, after China’s exports, industrial production and retail sales declined in the first two months.

US: Treasuries slid, sending 10-year yields to a four-month high, while the dollar rose and gold slid as the Federal Reserve’s improved economic assessment caused investors to reduce bets on more monetary easing. U.S. stocks were little changed a day after the biggest rally of 2012. The Fed said on Tuesday that strains in global financial markets have eased and the labour market is gathering strength.

Bonds – Trading activity on Wednesday remained weak in the market. Same trend recorded so far this week due to low demand despite increasing confidence of investors at the short end. The Nigerian 6.75% Jan2021 Eurobond touched a record low yield of 5.583% since issuance last year. MPC meeting holds next week, we expect a hold on MPR given the recent appreciation on the NGN and positive outlook for the year.

Bills – Demand for bills remain sustained from both offshore clients and onshore traders. The last issued 1yr tbill dipped another 20bps yesterday due to some early buying in the market to fill client trades. Outlook remains bullish on the bills side even ahead of the MPC meeting early next week.

Money Market – OBB and Unsecured rates close at 14.50% and 15.00% respectively.

CBN WDAS AUCTION

Offered: 200mio

Sold: 200mio

Marginal rate: 156.06 (157.6206 inc. the 1% commission)

Weighted average: 156.12

No. of banks: 20
FX
                               Hi                Low                 Close            Prev.Close
USD/NGN   157.70/80     157.35/45     157.60/70     157.60/70

 NIBOR(%)                                LIBOR (%)

 

O/N

 

14.9167

 

USD 1 month

 

0.2418

 

7 Day

 

15.3333

 

USD 2 month

 

0.3505

 

30 Day

 

15.7083

 

USD 3 month

 

0.4737

 

60 Day

 

16.1250

 

USD 4 month

 

0.5830

 

90 Day

 

16.5000

 

USD 6 month

 

0.7435

 

USD 12 month

 

1.0567

 

Y/Y Consumer Inflation January 2012 :

 

12.60%

 

FX Reserves: 08 March 2012 (USD bn)

 

34.682

 

MPR

 

12.00%

 

Source: FMD and CBN

 

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