A Review of the Nigerian Energy Industry

Financial market update

06 November 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – Barclays will add Nigeria to its emerging market locally currency government index from March 2013. Decision comes after reviewing changes in market place and polling investors on governance market and accessibility. Eligibility criteria include minimum market size equivalent of $5bn; each bond must have at least $300m outstanding and 12 months to maturity. About $6.5 trillion of funds track Barclays indexes it is estimated.

USA – The JPY strengthened against the USD before US presidential elections and the AUD rallied the most in two weeks after the nation’s central bank surprised economist by leaving interest rates unchanged.

US Treasuries snapped a gain before the US auctions $72 bn of coupon bearding debt this week and a$32 bn three year bond sale today. Government securities rose yesterday as investors sought the relative safety of US debt while Americans head to the poll today. Who ever wins will face the ob of avoiding the so called “fiscal cliff” of $607 bn in federal spending cuts and tax increases schedule to take effect in January unless the US congress acts.

EUROPE – The EUs top economic commissioner said euro leaders need to lock down an agreement on tackling Greece’s debt by next week as regional finance chiefs demanded their response to the sovereign debt crisis. A European G 20 official speaking before Commissioner Olli Rhen, on condition of anonymity cast doubt on the prospects of the Nov 12 deadline being met.

WDAS – NGN: CBN offered $50mio and sold $29.88mio, the marginal rate was maintained at 157.2974 [inc. the 1% commission] NGN: 7 banks bid at the auction today.

Bonds – Yields trended down across the curve on Monday, volumes were low though but the general sentiment leaned towards lower yields. Some caution though as yields get knocked down over 40bps from last auctions levels.

Bills – Most of the activity continues to be concentrated on the short end with any excess liquidity being deployed there, auctions come up on Wednesday and we can expect most of the longer dated demand to feed into there.

Indicative Currency Exchange Rates
Bid             Offer

EURUSD                1.2792           1.2802
GBPUSD                1.5992           1.6002
USDJPY                   8.03                8.43
USDCHF                0.9435          0.9455
GBPEUR                1.2500           1.2510
USDZAR                8.7227           8.8227
USDNGN               157.08           157.58
JPYNGN                19.5616          19.6116
CHFNGN               166.49            170.49
EURNGN               200.94           204.94
GBPNGN                251.20           255.20
ZARNGN                18.01              20.01

Hedge-fund managers and other large speculators reduced their net-long positions in crude to the lowest level in almost five months in the week ended Oct 30. Managed-money bets that prices will increase outnumbered so-called short positions by 122,863 futures and options combined; net long positions fell by 15,477 contracts or 11% w/w

Interest rates
NIBOR (%)                  LIBOR (%)

O/N               12.0833    USD 1 month             0.2080
7 Day             12.9583    USD 2 month             0.2595
30 Day          14.2500    USD 3 month             0.3118
60 Day          15.3333     USD 6 month             0.5358
90 Day          15.7083     USD 12 month           0.8738
Y/Y Consumer Inflation September 2012 :       11.3%
FX Reserves: 31( October 2012 (USD bn)         42.67
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  157.30/40  156.50/60   157.30/40   156.98/08

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