A Review of the Nigerian Energy Industry

Financial market update

13 September 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigeria has secured a $1.1 billion China Export Import bank facility to finance three priority projects that are key to the economic transformation efforts of the current administration. The terms of the facility are concessional with 20years term and 7years grace at 2.5% interest. The three projects and value of facility to them are the Abuja light rail project $500 million, National security Development system $100 million, Reconstruction of Four airport terminals $500 million.

EUROPE: European stock futures were little changed as investors awaited a Federal Reserve policy meeting that could include an announcement of further stimulus measures. Futures on Euro Stoxx 50 Index, a benchmark for the euro region, rose 0.1 percent to 2,568 at 7:36 a.m. in London. The Fed is likely today to announce another round of bond purchases, according to almost two-thirds of economists in a Bloomberg survey. The previous two series of quantitative easing totaling $2.3 trillion have failed to revive the labor market, which Fed Chairman Ben S. Bernanke said last month is a “grave concern.”

CHINA: China’s stocks fell to a one-week low after the official Xinhua News Agency said massive stimulus measures would be “detrimental” to sustainable growth, overshadowing the government’s plan to provide aid to exporters. The Shanghai Composite Index fell 0.5 percent to 2,115.21 as of 1:09 p.m. local time.

INDIA: India’s growth outlook is waning as the longest fall in capital-goods output since 2009 signals weaker investment, adding pressure on Prime Minister Manmohan Singh to salvage his development agenda. Capital-goods production, a gauge of corporate expenditure on factories and machinery, slid in July for a fifth straight month, the longest stretch since declines over most of 2009, a report showed yesterday.

Bonds – Bonds continue to be bought across the curve on Wednesday from sustained offshore demand. Only the 20yr 10.00% FGN JUL2030 traded up 20bps in a bid to correct its yield back to 12.00% levels.

Bills – Rising money market rates reducing the impact of takers ready to buy in the market due to a slowdown in OMO issuance this week. Divergent trade views expected into the new week as yields become attractive to some and lending rates limit others due to negative carry.

Money Market – Lending rates on the rise again 200bps up today to 16.00% and 16.50% on OBB and ON.

CBN CUT- OFF RATE – $/NGN 155.78

Hi Low Close Prev.Close
158.05/15 157.75/85 157.95/05 158.00/10

Interest rates

O/N 15.5833 USD 1 month 0.2238
7 Day 15.8750 USD 2 month 0.3153
30 Day 16.0833 USD 3 month 0.3943
60 Day 16.3333 USD 4 month 0.4969
90 Day 16.5833 USD 6 month 0.6834
USD 12 month 1.0080
Y/Y Consumer Inflation July 2012 : 12.8%
FX Reserves: 10 September 2012 (USD bn) 41.167
MPR 12.00%
Source: FMD and CBN

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