A Review of the Nigerian Energy Industry

Financial market update

25 June 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Recent data from the central bank shows Nigeria’s FX reserves balance at $37.6billion, similar to the levels they were a month ago. Crude oil production has supported reserves, helping to cushion the effect of an 8 percent decline in the price of Bonny Light crude over the same period. Concerns that the naira will experience a marked depreciation appear to be predicated upon a major slide in oil prices.

EUROPE: Central Bankers are finding it easier to support their economies than to spur expansion as the prospect of Japanese-like lost decades looms across the developed world. Another round of loosely correlated global stimulus has begun after the Federal Reserve extended its Operation Twist program and counterparts from Japan to Europe considered more monetary easing of their own.

INDIA: India plans to unveil measures today to support the rupee as its slump to a record low against the dollar threatens to intensify price pressure and boost the cost of companies of repaying foreign debt.

CHINA: Hong Kong’s biggest banks are calling for China to end a bank on non residents buying yuan in the city as falling deposits limit demand for Dim Sum bonds before a record sale. The industry wants permission to open yuan accounts for all customers not just permanent residents.

Bonds – Ahead of the auctions this week market was Bearish on Friday, yields inching up between 4-7bps across the curve. Expectation is that we will see yields cut above 16.00% at the primary auction this week and this will very likely fuel some selling in the markets.

Bills – Some activity around the one year bills, an initial dip in yields as some demand fed into the markets but the profit takers were out to push rates back up towards the close.

Money Market – OBB and unsecured O/N rates stable at 15.50% & 16.00%. Liquidity levels still low, the market awaits the FAAC inflow possibly in this week to often rates. ”

Hi               Low             Close          Prev.Close
USD/NGN 162.70/80  162.30/40  162.40/50  162.27/37

NIBOR (%)                            LIBOR (%)

O/N                15.5000         USD 1 month               0.2453

7 Day              15.5833         USD 2 month               0.3438

30 Day           15.9583          USD 3 month               0.4616

60 Day            16.4167          USD 4 month              0.5006

90 Day            16.7500         USD 6 month              0.6719

                                                 USD 12 month            1.0060

Y/Y Consumer Inflation May 2012 :                           12.7%

FX Reserves: 21 June 2012 (USD bn)                         37.13

MPR                                                                                  12.00%

Source: FMD and CBN


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