A Review of the Nigerian Energy Industry

Financial market update

19 March 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: In a move to avert a repeat of the crisis that affected the banking sector in 2009, the CBN last week announced plans to conduct another round of stress test on commercial banks before the end of the second quarter of 2012. Special Adviser to the CBN Governor and Director of Risk Management, Mrs. ‘Folakemi Fatogbe, made this known at the inaugural West African Risk Management conference organized by London-based Moody’s Analytics in Lagos.

USA: Not since 1999 have currency traders been bullish on the dollar for so long, a sign that the market sees the U.S. resuming its role as the engine of global economic growth. Futures anticipating a stronger dollar against its developed-market peers have outnumbered those predicting a drop for 26 consecutive weeks through the five days ended March 13, according to market data. That is the longest streak since the start of a three-year rally in the world’s reserve currency 13 years ago.

CHINA: Most Chinese stocks rose after an International Monetary Fund official said China will avoid an economic hard-landing as investment remained strong. Market watchers said the government has the tools to offset a decline in economic growth such as monetary policy or measures targeting specific industries. They believe the property markets is still the biggest risk the Chinese economy is facing currently.

INDIA: India’s widening fiscal deficit and the lack of specific policies in last week’s budget to address weaknesses have been seen by experts as credit negative. According to a top rating agency executive, “A dependence on corporate tax revenue and vulnerability to commodity prices and exchange rates weakens the government’s credit profiles”.

Bonds – Bearish last Friday with some market players a bit jittery ahead of today’s’ MPC meeting. Only a handful of trades went through as market remained quiet.

Bills – Continued bullish market with demand from offshore feeding into the long dated high yielding maturities with focus on the February & March 2013s

Money Market – OBB & unsecured rates are averaging 14.50% & 16.00% respectively

                               Hi               Low                 Close             Prev.Close
USD/NGN  157.94/09  157..48/58   157.50/60  157.82/92

NIBOR (%)                                       LIBOR (%)
O/N                      15.6250            USD 1 month             0.2418
7 Day                   16.0000           USD 2 month             0.3505
30 Day                16.3750            USD 3 month             0.4737
60 Day                16.7083            USD 4 month             0.5800
90 Day                17.0000           USD 6 month             0.7409
USD 12 month            1.0531
Y/Y Consumer Inflation February 2012 :                     11.90%
FX Reserves:                           15 March 2012 (USD bn) 34.809
MPR                                                                                               12.00%
Source: FMD and CBN

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