A Review of the Nigerian Energy Industry

Financial market update

01 November 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – A N102 trillion ($650 billion) investment opportunity exists in infrastructure across the energy, power and transport sectors of the Nigerian economy, according to research firm Frost & Sullivan. The investment which could take up to 10 years is fundamental to driving growth in Nigeria’s economy, the research firm said. The Federal Government is under intense pressure to restore, upgrade and construct new infrastructure across all sectors— particularly with regard to the provision of reliable access to energy and suitable transport facilities

India – The rupee is falling the most among emerging Asian economies as investors question the government’s ability to implement policies to boost growth, which the central bank predicts will be the least in a decade. The central bank on Oct 30, resisted Finance Minister Palaniappan Chidambaram’s call for lower interest rates, citing the need to contain inflation even as the Governor Duvvuri Subbarao lowered the growth forecast for the year through March 31.

China – A Chinese manufacturing gauge based on a survey of purchasing managers climbed to 50.2 in October from 49.8 in September adding to sings growth in the world’s second largest economy is rebounding after a seven quarter slowdown.

Bonds – Bullish sentiments in the market yesterday as yields dipped across the curve on the back of rumored large demand from and offshore player. We might see some sell down if not in the next few days mid November ahead of the auctions.

Bills – Quiet session yesterday in the secondary market as the CBN came out to offer 85day OMO bills to the market. Most of the activities for the last couple of trading days have been focused on the shorter dated maturities and all the demand on that end of the curve likely went into the OMO auction.

Money Market – OBB and unsecured O/N rates at 12.00% & 12.50% to close yesterday.

CBN WDAS: CBN offered and sold $50mio, the marginal rate was 157.2974 [inc. the 1% commission] signifying 2 points appreciation for the local unit. Weighted average: 157.3277 [inc. the 1% commission] 9 banks submitted bids at the auction.

Indicative Currency Exchange Rates
                               Bid             Offer
EURUSD            1.2961             1.2971
GBPUSD            1.6129              1.6139
USDJPY             80.04               80.44
USDCHF            0.9319             0.9339
GBPEUR            1.2445             1.2455
USDZAR            8.6599            8.7599
USDNGN           157.07             157.57
JPYNGN            1.9624             2.0124
CHFNGN           168.55             172.55
EURNGN           203.58            207.58
GBPNGN            253.34            257.34
ZARNGN            18.14               20.14

Crude continued its narrow trading band; Brent hardly moved beyond $1/bbl while WTI was a bit more active. Brent traded largely in line with the euro, pealing slightly before noon in London and falling as the euro came off. Consumers continue to wait with bated breath, believing that the weakness seen last week will return, while producers are waiting for the climb to $115 territory.

Interest rates
NIBOR (%)                        LIBOR (%)
O/N             12.0000            USD 1 month               0.2120
7 Day           13.0000            USD 2 month               0.2610
30 Day        14.3333             USD 3 month               0.3128
60 Day        15.2500             USD 6 month              0.5399
90 Day        15.5893             USD 12 month             0.8775
Y/Y Consumer Inflation September 2012 :                11.3%
FX Reserves: 23 October 2012 (USD bn)                   42.27
MPR                                                                                   12.00%
Source: Reuters Guardian, Bloomberg, Central Bank of Nigeria,
Financial Market Dealers Association Standard Chartered Bank Nigeria

                            Hi                Low         Close       Prev.Close
USD/NGN  157.22/32   156.96/06   156.98/08   156.97/07

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