A Review of the Nigerian Energy Industry

Financial market update

10 December 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – CBN will give loan facilities to embattled Societe Generale Bank of Nigeria (SGBN) as well as Savannah Bank, to enable them effectively recapitalize and come back to business. CBN’s director of banking supervision, Tokunbo Martins affirmed that what each bank gets would depend on the monies required to meet other funding obligations after meeting the minimum capital requirements, stressing that it would be subject to a few conditions, including a satisfactory risk management framework and evidence of good corporate governance. [BusinessDay]

USA – The Federal Reserve decides whether to increase its record economic stimulus. Euro are finance ministers are likely to approve the payment of EUR45 bn bail out aid to Greece allowing the nations to avoid bankruptcy and continue in the common currency. Japan’s Tankan survey may indicate large manufacturers where pessimistic again in the fourth quarter. OPEC members decide whether to cut their oil output target.

CHINA – China’s one year interest rate swap declined on speculation the central bank will keep adding funds to the financial system after consumer prices rose less than economists forecast. Inflation quickened to 2% in November from 1.7% in October. The one year swap contract settled at 3.36%. Industrial output however increased 10.1% from an year earliest in November and retail sales climbed 14.9%. The biggest gains since March data showed over the weekend.

Bonds – The trend continued on Friday as yields steadily went lower in the markets yet again. The auction circular for December will soon be available with an offer expectation of between 60-90billion across the 5, 7 &10 year.

Bills – Very bearish session on Friday fuelled by an OMO offering of 97day bills by the central bank. Rates went up an average 15-20bps across the tradable maturities as many players tried to switch for better at the short end specifically. With no timetable for issuance for the rest of the year, the CBN will likely rely on the OMO issuance to
manage liquidity and borrow short term.

Money Market – OBB and unsecured O/N rates dipped to settle at 11.50% and 11.75% as liquidity levels thin out.

Indicative Currency Exchange Rates
                             Bid            Offer
EURUSD            1.2903         1.2913
GBPUSD            1.6023         1.6033
USDJPY             82.41            82.81
USDCHF            0.9357         0.9377
GBPEUR            1.2417          1.2427
USDZAR            8.6667         8.7667
USDNGN           156.90         157.40
JPYNGN            1.9039         1.9539
CHFNGN           167.68         171.68
EURNGN           202.45        206.45
GBPNGN            251.40        255.40
ZARNGN            18.10           20.10

Oil fell after ECB cut its forecast growth and US regulators not able to reach an agreement on budget plan. WTI was at $86.36/bbl (+$0.10) and Brent fell $1.78 to $107.03/bbl which bring the WTI-Brent benchmark premium to the narrowest level at $20.77 since October 19.

Interest rates
NIBOR (%)                          LIBOR (%)

O/N              12.0000             USD 1 month          0.2120
7 Day            12.3750              USD 2 month          0.2560
30 Day         13.0417               USD 3 month         0.3095
60 Day         13.5333               USD 6 month         0.5190
90 Day         13.9167               USD 12 month        0.8530
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  157.20/30  156.85/95  157.00/10  156.90/00

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