A Review of the Nigerian Energy Industry

Financial market update

30 May 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: CEO of the Nigerian Stock Exchange recently, assured capital market stakeholders that the management of the Exchange had concluded plans to review the commencement of initial public offer for willing investors to participate in by the end of December. The challenges facing the NSE are undeniable, problems of limited liquidity, hitherto poor governance practices and loss of investor confidence, have all contributed to the current lack of depth in the market, compounding the lack of market recovery since the financial crisis of 2008. [Guardian]

EUROPE: European stocks fell before an Italian bond sale and reports that may show economic confidence dropped in the euro area, while pending home sales in America stagnated. U.S. index futures and Asian shares also retreated. The Stoxx Europe 600 Index declined 0.8 percent to 242.38 in London yesterday. The benchmark measure has lost 11 percent from this year’s high on March 16 amid growing concern that Greece will fail to implement agreed austerity measures and leave the euro area.

CHINA: China’s banks, awash with funds, are paying the lowest interest rate for government deposits since 2010 and boosting holdings of sovereign bonds as a deteriorating economy curbs risk-taking. The People’s Bank of China cut lenders’ reserve-requirement ratios this month for the third time since November, seeking to spur lending after data showed growth in industrial output and exports slumped in April.

Bonds – Some light selling on Monday on the short to medium term, volumes are still very low with yields only inching up between 3-6 bps

Bills – The CBN continued with its OMO offering on Monday [results below] Secondary market is quite volatile buying pressure across board with most of the focus on short dated maturities.

Money Market – OBB and unsecured O/N rates still staying low at 10.25% on Monday as the system is awash with liquidity on the back of the inflows from the bond maturities of N290billion last week and FAAC of approximately N280billion Expectation is that the CBN will keep coming out to offer OMO in an attempt to mop up this liquidity.

CBN WDAS AUCTION (28/05/2012)
Offered: 250mio Sold: 250mio
Marginal rate: 155.75
Weighted average: 155.81
No. of Banks: 19

FX
Hi               Low         Close        Prev.close
USD/NGN
160.30/40  158.85/95  158.85/95  159.60/70

NIBOR (%) LIBOR (%)

 

O/N

 

10.6667

 

USD 1 month

 

0.2388

 

7 Day

 

11.4167

 

USD 2 month

 

0.3458

 

30 Day

 

12.7500

 

USD 3 month

 

0.4669

 

60 Day

 

13.3333

 

USD 4 month

 

0.5671

 

90 Day

 

13.8750

 

USD 6 month

 

0.7364

 

USD 12 month

 

1.0692

 

Y/Y Consumer Inflation April 2012 :

 

12.9%

 

FX Reserves: 25 May 2012 (USD bn)

 

37.566

 

MPR

 

12

 

Source: FMD and CBN

 

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