A Review of the Nigerian Energy Industry

Financial market update

13 June 2012, Sweetcrude, Lagos – Local and international financial market update.strong>NIGERIA: Underwriting firm, Aiico Insurance plc is planning to raise an additional N8 billion capital as part of efforts to remain financially strong and competitive in the country’s insurance market, confirming the reports by Standard and Poor that the Nigerian insurance industry would see a lot of consolidation in the next two years.

EUROPE: Greece’s state budget deficit in the first 5 months beat targets set under the country’s loan accords with the European Union and the International Monetary Fund, even as it widened compared with the same period of 2011. The shortfall which excludes spending by state-owned institutions and companies was 10.9 billion euros compared with a target of 12.9 billion euros, according to an emailed statement from the Athens-based Finance Ministry.

INDIA: India’s rupee dropped to the lowest level in more than a week as a report showed that factory output rose less than estimated in April. The rupee declined 0.2 percent to 55.815 per dollar in Mumbai, according to data compiled by Bloomberg. The currency weakened for a third day after Standard & Poor’s said in a statement yesterday that slowing growth and political roadblocks threatened India’s BBB- rating, which is one level above junk.

CHINA: China’s growth has slowed for five quarters, with gross domestic product rising 8.1 percent in January-to-March, the least in almost three years. While exports exceeded forecasts in May, the pace of gains eased to 9 percent so far this year, from 26 percent in the same period of 2011. The central bank lowered interest rates for the first time since 2008 on June 7, and cut banks’ reserve ratios for the third time since late November. The economy’s downshift has been uneven. Guangdong, the largest exporting province and one that’s focused on upgrading production to higher-value goods, has seen resilience in its job market.

Bonds – Markets still quiet in general on Tuesday, yields coming off across the curve in small moves between 2-10bps scattered across the curve. Continued fear of inflation holding the market and investors back from going in heavy.

Bills – Relatively stable markets yesterday, some demand feeding into the curve but rates largely flat as a whole. We expect rates on the long end to possibly inch lower.

Money Market – OBB and unsecured O/N rates holding at 14.00% & 14.50%. Liquidity levels still relatively low.

FX
                          Hi            Low          Close         Prev.Close
USD/NGN 163.63/73  162.30/40  162.30/40  162.87/97

NIBOR (%) LIBOR (%)

 

O/N

 

15.0000

 

USD 1 month

 

0.2408

 

7 Day

 

15.2500

 

USD 2 month

 

0.3473

 

30 Day

 

15.7500

 

USD 3 month

 

0.4679

 

60 Day

 

16.0000

 

USD 4 month

 

0.5681

 

90 Day

 

16.3333

 

USD 6 month

 

0.7369

 

USD 12 month

 

1.0707

 

Y/Y Consumer Inflation April 2012 :

 

12.9%

 

FX Reserves: 11 June 2012 (USD bn)

 

37.647

 

MPR

 

12.00%

 

Source: FMD and CBN

 

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