A Review of the Nigerian Energy Industry

Financial market update

15 November 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – The sum of N23 billion will be spent by the Federal Government on various projects in the Ministries of Power Education, Water Resources, Health and Works. This was the outcome of the Federal Executive Council meeting presided over Wednesday by President Goodluck Jonathan.

Europe – European Union budget enforces Olli Ehen removed an obstacle blocking Spanish Prime Minster Mariano Rajoy’s path to a sovereign bailout when he endorsed the country’s efforts to reduce its budget deficit. The real estate bubble that hammered the banking system has already forced Spain to tap the EU for EUR 100 billion of aid for its banks and the government is deliberating whether to cal on Europe’s rescue fund to help shore up its own accounts.

USA – The Federal Reserve is embarking on a the next step in Chairman Ben S Bernanke’s journey towards greater transparency – tying its outlook for borrowing costs to measure of employment and inflation. Policy makers generally favored the use of economic variables to provide guidance on the when they are likely to approve their first interest rate increase since 2008. Such measures might supplement a calendar date currently set at mid 2015.

China – Chinese banks bad loans increased for a fourth straight quarter the longest streak of deterioration since the data became available in 2004. Non performing loans rose by Yuan 22.4 billion in the three months ended Sep 30 to Yuan 478 billion. Bad loans increased at all types of institutions including the largest state owned lenders, rural banks and foreign banks the regulator said.

Bonds – Relatively stable market yesterday with yields inching downward.

Bills – Some profit taking to open yesterday counteracting Tuesday’s downward movement in rates. The volatility expected to continue in the run up to the MPC decision next Tuesday as well as the primary auction next Wednesday.

Money Market – OBB and unsecured O/N rates moved higher to close the day at 11.75% & 12.50% as liquidity Thins. The market opened the day roughly N100bio long.

NGN: CBN offered and sold $200mio and maintained the marginal rate at 157.3075 [inc. the 1% commission].

Indicative Currency Exchange Rates
                                  Bid            Offer
EURUSD                1.2736          1.2746
GBPUSD                1.5845           1.5855
USDJPY                 80.87            81.27
USDCHF                0.9449         0.9469
GBPEUR                1.2440          1.2450
USDZAR                8.9147          9.0147
USDNGN               157.45           157.95
JPYNGN                1.9470           1.9970
CHFNGN               166.63          170.63
EURNGN               200.53          204.53
GBPNGN               249.48          253.48
ZARNGN               17.66             19.66

Futures flew to the highest level in more than a week after Gaza Strip was attacked by Israel – Crude went up almost a dollar to settle at $86.27/bbl (+1.1%) and Brent rose to $109.61/bbl (+$1.35) with the WTI-Brent benchmark
premium widen to $23.29.

Interest rates
NIBOR (%)                    LIBOR (%)
O/N                12.1667       USD 1 month            0.2075
7 Day              13.0417       USD 2 month           0.2590
30 Day           14.3000      USD 3 month           0.3083
60 Day           15.9738       USD 6 month           0.5230
90 Day           15.2333       USD 12 month          0.8605
Y/Y Consumer Inflation September 2012 :          11.3%
FX Reserves: 9 November 2012 (USD bn)           42.91
MPR                                                                              12.00%
Source: Reuters Guardian, Bloomberg, Central Bank of Nigeria,
Financial Market Dealers Association Standard Chartered Bank Nigeria

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157.95/05 157.65/75 157.65/75 157.35/45

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