A Review of the Nigerian Energy Industry

Financial market update

16 November 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – German and Nigerian officials started planning for a 30 megawatt solar park in Katsina State as a part of a wider plan to support the technology across the continent. The project is being implemented in partnership with a German contractor and the state with construction scheduled to start during 2013. Helios Energy, another German company on Aug. 28 signed an agreement with the state of Kaduna to develop a 30 megawatt plan estimated at EUR50.m

USA – The Federal Reserve told the 30 largest banks to test whether they could withstand a severe recession the US and other major economies with weakening housing markets. The most sever scenario outlined by the FED include a 6.1% decline in GDP in the Q1 of 2013 and an average unemployment of 12.1% in Q2 of 2014. The FED said that the adverse scenarios where not forecasts and were “designed to assess the strength and resilience of financial institutions and their ability to continue to meet the credit needs of households and businesses”

China – Copper traders extended a bullish streak into a fifth week on increasing confidence that China the biggest buyer of the metal will lead a global recovery as nations from the US to Japan do more to spur growth. China factory output growth in October beat analysts forecast a month after the nation which consumes about 40% of worlds copper increased imports of refined metal by the most this year.

India – India’s rupee headed for a third weekly los son concerns that slowing growth at home and abroad will widen the nation’s budget and current account deficits. Industrial production declined 0.4% in September YOY and the trade shortfall climbed to a record.

Bonds – A light rally on Thursday as some market players who are speculating a rate cut at next week’s MPC came into the markets today, still seeing some demand from offshore players and with the bond auction offering about N15bio less we might just see yields dip across board.

Bills – Relatively quiet day on Thursday, the bills around 80-90 days were sold off, in the run up to the auction next week, we will likely see some more profit taking and market participants trying to go into the auction for higher yields.

Money Market – OBB and unsecured O/N rates eased to close at 11.00% & 11.50% as a liquidity injection came from maturing OMO bills

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        0.2570
30 Day         14.3000           USD 3 month        0.3110
60 Day         15.9738            USD 6 month        0.5230
90 Day         15.2333            USD 12 month      0.8595
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

                              Hi            Low          Close        Prev.Close
USD/NGN    157.98/08   157.70/80   157.95/05   157.35/45

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