A Review of the Nigerian Energy Industry

Financial market update

22 November 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – The Naira strengthened on inflows for purchases of fixed income securities after the central bank held its benchmark interest rate at a record high yesterday to check inflation and stabilize the local currency. Nigerian Bond yields remain attractive offshore investors with the inflows boosting dollar supply. CBN Governor Lamido Sanusi stated that the appreciation in the Naira could be traced to tight monetary conditions, improved supply of foreign exchange to the market by oil companies and increased inflows from portfolio investors.

India – Indian’s rupee traded at a two month low before the government seeks lawmaker’s approval for policy changes announced this quarter in the winter sessions of parliament that begins today. Prime Minister Manmohan Singh needs legislators support for plans to allow amore foreign investment in pension and insurance industries.

Europe – Moody’s down grade of French sovereign debt by one level to Aa1 and maintained its negative outlook citing what it said was a worsening growth outlook. S&P lowered its rating by one level to AA+ on Jan 13. French bonds have handed investors an 8.8% return since the S&P downgrade, more than double the 3.9% gain from AAA rated sovereign bonds. Top ranked German bonds returned 3.1% during the same period.

Bonds – The markets rallied to open on Wednesday as popular expectation and sentiment was that the auction would close significantly lower than secondary market levels. The profit takers pushed yields up to close the day but we can expect the markets to rally again tomorrow due to the low cut off particularly on the 22s.

Bills – Bullish markets still on Wednesday as the liquidity in the money markets put downward pressure on rates. Trend is expected to continue tomorrow unless the CBN comes out to mop up through OMO issuance

Money Market – OBB and unsecured O/N rates held stable today at 10.00% & 10.25%, the market still liquid from the FAAC flows which hit the system on Wednesday.

CBN WDAS – offered and sold $200mio, with the marginal rate now at 157.3176 [inc. the 1% commission], 1 point higher than the previous auction.

Indicative Currency Exchange Rates
Bid            Offer

EURUSD            1.2784          1.2794
GBPUSD             1.5960          1.5970
USDJPY              82.46            82.86
USDCHF             0.9378         0.9398
GBPEUR             1.2422          1.2432
USDZAR             8.9562         9.0562
USDNGN            157.60          158.10
JPYNGN             1.9112           1.9612
CHFNGN            168.05          172.05
EURNGN            201.48          205.48
GBPNGN            251.53           255.53
ZARNGN            17.60             19.60

Oil rose again for a second day after EIA data shows stockpiles declined for the first time in three weeks: WTI rose by $0.39 to $87.77/bbl, and Brent climbed higher by $1.03 to $110.86/bbl with the WTI-Brent benchmark premium at $23.48.

Interest rates
NIBOR (%)                    LIBOR (%)

O/N              10.5000       USD 1 month          0.2075
7 Day            10.8333        USD 2 month         0.2570
30 Day         11.9167          USD 3 month         0.3115
60 Day         12.4167         USD 6 month         0.5270
90 Day         13.0000        USD 12 month       0.8610
Y/Y Consumer Inflation September 2012 :      11.3%
FX Reserves: 15 November 2012 (USD bn)      43.37
MPR                                                                          12.00%
Source: Reuters Guardian, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria

Hi            Low          Close           Prev.Close
157.85/95  157.48/58   157.60/70    157.85/95

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