A Review of the Nigerian Energy Industry

Financial market update

26 November 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – Lagos State issued N80billion in a seven year bond with a coupon of 14.50% on Thursday making it the largest ever subnational bond ever issued in Nigeria and represents the first tranche, under its N167.5 billion debt issuance between now and 2019. it is also the fourth time the state is raising funds via bond issuance to drive its infrastructural development. The funds are expected to be deployed to complete the Lagos-Badagry 10 lane road and the Lagos light rail project.

Europe – Euro area finance ministers try for the third time this month to clear an aid payment to Greece and forge a blueprint to keep the toucty a solvent member of the currency bloc. The ECB gave leaders more time with its September pledge to purchase sovereign debt. As officials put finishing touches on a bail out for Cyprus, divisions were on display in Spain.

China – China’s wage gains have moderated on weaker corporate profits, capping consumer demand as the government seeks to sustain a rebound after a seven quarter economic slowdown.

The rupee halted a four day decline after top government officials pledged to narrow the nation’s budget deficit. Finance Minister Palaniappan Chidambaram said on Nov. 24 that he’s optimistic the shortfall will amount to 5.3% of GDP for the 12 months through March, compared with 5.8% last year.

Bonds – A very quiet trading session with continued profit taking sentient. It is not impossible that we see a retracement this week as some demand will likely feed into the markets today.

Bills – Market rallied on Friday. A lot of players who missed out on the primary auction and at the OMO auctions and so they hit the market hard. The last one year bill sold on Wednesday was listed on Friday and it came off 96 bps to close as there was significant demand on this bill that was lost at the auction.

Money Market – OBB and unsecured O/N rates inched up slightly to close at 10.25% & 10.50%, as liquidity levels drop on the back of funding for the Bond & T-Bill primary auctions as well as the OMO auctions which also reduced the liquidity in the system.

Indicative Currency Exchange Rates
                           Bid           Offer
EURUSD         1.2958          1.2968
GBPUSD          1.6021          1.6031
USDJPY          82.31             82.71
USDCHF          0.9290        0.9310
GBPEUR         1.2363           1.2373
USDZAR          8.8827         8.9827
USDNGN        157.40           157.90
JPYNGN          1.9123           1.9623
CHFNGN         169.43           173.43
EURNGN         203.96         207.96
GBPNGN          252.17          256.17
ZARNGN          17.72             19.72

Oil has the biggest weekly gain amidst an unexpected rise in German Business confidence in November. WTI rose $0.90 to $88.28/bbl, while Brent increased $0.83 to $111.38/bbl, with WTI-Brent benchmark premium hovering at $23.10.

Interest rates
NIBOR (%)                      LIBOR (%)
O/N                10.5833        USD 1 month             0.2085
7 Day              10.9583        USD 2 month             0.2570
30 Day            11.7917         USD 3 month             0.3115
60 Day           12.1250         USD 6 month             0.5270
90 Day           15.5417          USD 12 month           0.8590
Y/Y Consumer Inflation October 2012 :                 11.70%
FX Reserves: 21 November 2012 (USD bn)           43.88
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  157.70/80  157.40/50  157.65/75  157.45/55

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