A Review of the Nigerian Energy Industry

Financial market update

12 December 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – The Federal Executive Council (FEC) yesterday approved the utilization of funds nearing N3 trillion accrued in the country’s pension scheme for the  development of infrastructure in the country. The pension assets managed by Pension Fund Administrators (PFAs) as the October 2012 stood at N2.8 trillion, and are largely invested in federal and state government bonds, fixed securities, the stock market and other secured instruments within the ambit of investment guidelines issued by the National Pension Commission (PenCom).

USA – Job openings n the US rose to a four month high in October, showing companies kept expanding in the face of looming tax increases and budget cuts. However the employment gains so far have failed to satisfy FED policy makers who are meeting today and tomorrow to consider further easing to spur the economy.

EUROPE – Greece drew enough bonds to its buyback of its debt to meet a goal that’s critical to unlocking aid from the IMF and EU. Greece was seeking to use EUR10Bn loan to retire EUR30bn of debt. Investors tendered EUR31bn face value of bonds

CHINA – China’s power consumption rose 9% last month YoY to 420 bn Kwh indicating that the industrial sector is stabilizing overall.  It is widely believed that the governments RMB 1 trillion investment stimulus in mid year was the key contributory factor for power consumptions rapid growth.

Bonds – With market participants looking forward to 2013 and the possibility of lower yields should there be any quantitative easing and should we continue to see the steady supply of offshore flow if the Nigeria story keeps looking good yields are likely to trade lower. It is this very reasoning by some market players that is causing the current bullish run in the markets and we will possibly see the whole curve trading below 12.00% before year end.

Bills – No OMO activity on Tuesday as liquidity levels drop. With the calendar for the year expired and maturities coming over the next two weeks we can be very sure the CBN will come out to offer OMO bills to mop up the liquidity in the system. Mixed markets yesterday with rates largely stable across board.

Money Market – OBB and unsecured O/N rates are inching back up as the liquidity levels drop.

Indicative Currency Exchange Rates
                            Bid            Offer
EURUSD         1.2999         1.3009
GBPUSD         1.6113           1.6123
USDJPY          82.65            83.05
USDCHF         0.9324         0.9344
GBPEUR         1.2394          1.2404
USDZAR         8.6501          8.7501
USDNGN        157.05          157.55
JPYNGN         1.9002          1.9502
CHFNGN        168.44          172.44
EURNGN        204.15          208.15
GBPNGN        253.05          257.05
ZARNGN        18.16             20.16

Oil fluctuated after a report showed stockpiles rising in the U.S., the world’s biggest crude consumer, and as OPEC delegates gathered in Vienna to decide the
group’s production quota.

Interest rates
NIBOR (%)                  LIBOR (%)

O/N              13.2500     USD 1 month        0.2110
7 Day            13.5833     USD 2 month        0.2560
30 Day         13.8333     USD 3 month        0.3095
60 Day         14.1667      USD 6 month        0.5170
90 Day         14.3750     USD 12 month       0.8520
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 157.45/55   157.05/15    157.40/50   157.05/15

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