A Review of the Nigerian Energy Industry

Financial market update

04 December 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – The coordinating Minister for the economy and Finance Minister today announced two measures aimed at giving impetus to the Nigerian Capital Market. The first measure is a forbearance of about N22.6 billion on the margin loans of 84 stock brokers, in accordance with Section 6(5) of the AMCON Act. In effect, AMCON is set to absorb the margin losses of stockbrokers. The minister however, stated that forbearance will be accompanied with sanctions to discourage excessive borrowing behavior by capital market operators in the future.

Europe – European finance ministers voiced confidence that Greece will pull off a successful bond buyback which is key to stem the debt crisis in the country. They are to repurchase EUR10 bn of bonds maturing from 2023 to 2042 offering a higher than planned price which is considered a market based way of cutting Greece’s debt. Dec. 13 is the date the next EUR34.4 bn in bailout funds is to be released to Greece. It is strongly expected that Cyprus would be the next in line for bailout funds.

India – The rupee weakened for a second day as US budget talks remained deadlocked and before local lawmakers debate measures to allow more overseas investment. The decision for foreign companies to open super markets in India will be debated today.

China – China is forecast to widen the yuan’s trading band for a second year running in 2013 as Asia’s biggest economy seeks a greater role for its currency in global trade and investment. A widening of the band would indicate readiness of the regulator for higher currency volatility and capital flows would become more volatile as well.

Bonds – Quiet markets, some light volatility but yields largely flat to close the day on Monday.

Bills – The easy liquidity in the markets put downward pressure on yields today with the major focus was concentrated around the 91 day bills. Yields off an average 30bps across the maturities.

Money Market – OBB and unsecured O/N rates eased to close at 11.00% and 11.25% as the markets opened the week on a fairly liquid note.

CBN WDAS – CBN offered $180mio and sold $164.28mio, the marginal rate was maintained at 157.3176 [inc. the 1% commission].

Indicative Currency Exchange Rates
EURUSD                   1.3056                1.3066
GBPUSD                   1.6095                 1.6105
USDJPY                     82.11                  82.51
USDCHF                    0.9260              0.9280
GBPEUR                    1.2327               1.2337
USDZAR                    8.8552              8.9552
USDNGN                   157.30              157.80
JPYNGN                    1.9157               1.9657
CHFNGN                   169.87              173.87
EURNGN                  205.37               209.37
GBPNGN                   253.17                257.17
ZARNGN                   17.76                  19.76

WTI settled higher at $89.09/bbl yesterday while Brent settled $0.31 lower at $110.92/bbl, with the WTI-Brent benchmark premium at $21.83.

Interest rates
NIBOR (%)                          LIBOR (%)

O/N              12.0000            USD 1 month             0.2150
7 Day            12.5417             USD 2 month             0.2580
30 Day         13.0417             USD 3 month             0.3105
60 Day         13.6250            USD 6 month             0.5260
90 Day         14.0000           USD 12 month           0.8600
Y/Y Consumer Inflation October 2012 :                    11.70%
FX Reserves: 30 November 2012 (USD bn)              44.47
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  157.95/05  157.05/15  157.30/40

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