A Review of the Nigerian Energy Industry

Financial market update

31 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Export-Import Bank of China agreed to lend Nigeria $1 billion for a rail link to be built by the China Civil Engineering Construction Corp., the Transport Ministry of the West African country said. The loan to be given on “concessionary terms” will partly finance the planned $1.5 billion 157-kilometer (98-mile) double- carriage railway between Lagos, the commercial capital, and southwest Ibadan, Nigeria’s third-largest city, the ministry said yesterday in an e-mailed statement. Africa’s top oil producer is increasing infrastructure spending to spur business in Africa’s most populous nation of more than 160 million people.

US: U.S. stocks retreated, trimming the third straight monthly advance for the benchmark Standard & Poor’s 500 Index, amid concern about a worsening of Europe’s debt crisis and of a further slowdown of the global economy. The S&P 500 declined 0.7 percent to 1,400.40 at 11:23 a.m. New York time yesterday.

CHINA: “China has promised to allow the import of more products from India, to close an existing USD 23.4 billion trade gap between the two countries, despite a series of trade disputes in recent months,” state run China Daily reported. JEG meeting attended by India’s Commerce Minister Anand Sharma and his Chinese counterpart Chen Deming was held in New Delhi early this month where India has taken up the yawning trade gap and pressed China to open up for India IT, Pharmaceutical, Agricultural products besides Bollywood films.

INDIA: Indian equities rose for the first time in five days ahead of a report today on the nation’s economic growth and a speech by U.S. Federal Reserve Chairman. The BSE India Sensitive Index, or Sensex, increased 0.3 percent to 17,541.64, rebounding from an intraday drop of 0.7 percent, as investors closed bearish bets following the expiry of derivative contracts on Thursday.

Bonds – Illiquid session on bonds yesterday due to volatility and significant demand from both onshore and offshore participants in the market. Yields expected to dip further on the bond curve.

Bills – OMO auction notice in at the start of Thursday’s session subdued all expected demand in yesterday’s session forcing traders to sell-off across board in anticipation of a significant mop-up by CBN. Results were, however, announced with nothing sold yet again at this auction, bullish trend expected in the market today.

Money Market – Lending rates off 150bps to 11.00% and 11.50% on O/N and OBB rates respectively, rates reacting to cash inflow of ngn34 bio from a maturing t-bill yesterday, additional ngn46 bio in today from a bond maturity.

Hi           Low           Close         Prev.Close
   158.05/15   157.70/80  158.04/14   157.98/08

Interest rates
NIBOR (%)                    LIBOR (%)
O/N              13.3750        USD 1 month        0.2305
7 Day            14.0833       USD 2 month        0.3285
30 Day         15.5417         USD 3 month        0.4208
60 Day         16.2083        USD 4 month        0.5264
90 Day         16.5417         USD 6 month        0.7092
USD 12 month      1.0330
Y/Y Consumer Inflation June 2012 :               12.9%
FX Reserves: 29 August 2012 (USD bn)         38.620
MPR                                                                        12.00%

Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

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