A Review of the Nigerian Energy Industry

Financial market update

18 December 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: According to the National Bureau of Statistics inflation rose to 12.3% year-on-year in November compared to 11.7% in October. Food prices continue to indicate lagged effects of the floods which occurred from July to Mid-October, as well as other demand and supply conditions. In the period under review, YoY urban inflation rate stood at 15.8% compared to 15.3% on October.

USA – The US Treasury supposedly plans to sell bulk of the stakes it hold sin banks under the TARP program in 2012. The government still holds stakes in 218 banks and scores of them missed dividend payments owed to the government. It is estimated that these banks owe the government up to USD7.5bn.The stakes were bought during the financial crisis that started in 2008.

EUROPE – Pessimism about the euro is shifting to Europe’s diming growth prospects from the risk of sovereign default in the currency union. The 17 nation block slid into recession in the 3rd qtr as ECB pledges unlimited bond purchases in a bid to stimulate growth.

CHINA – China’s new home prices rose in the majority of cities the government tracks in November as property curbs slowed construction reducing the supply available for sale. Prices climbed in 53 of 70 cities from the previous month compared with 35 in October. Prices fell in 10 cities. The government is maintaining property controls while it said it will seek a higher quality and efficiently of growht next year following the annual central economic work conference in Beijing over the weekend.

Bonds – With inflation numbers up, yields opened up yesterday across most of the curve but came off towards the close. Activity was relatively quiet, a mixture of the December slowdown and players also looking towards the auction causing the lull.

Bills – Quiet session yesterday in the bill markets, rates largely stable some slight selling on the long end.

Money Market – OBB and unsecured O/N rates went up 50 and 25bps respectively to close at 14.50% and 14.75% as the liquidity levels drop. A liquidity injection will come Thursday of about N204billion in maturing TBills and this should boost liquidity and soften rates.

WDAS – CBN offered and sold $200mio, lowest intervention rate 157.3277 (1% inclusive), they maintained the rate from last auction. 20 banks bid at this auction.

Indicative Currency Exchange Rates
                              Bid             Offer
EURUSD           1.3172            1.3182
GBPUSD           1.6214            1.6224
USDJPY            84.00             84.40
USDCHF          0.9175            0.9195
GBPEUR          1.2309           1.2319
USDZAR          8.5403           8.6403
USDNGN         157.50            158.25
JPYNGN          1.8750            1.9250
CHFNGN         171.66             175.66
EURNGN         207.46            211.46
GBPNGN          255.37            259.37
ZARNGN         18.44               19.19

WTI closed higher (at $87.20) for the 3rd day running after the Fed reported that industrial output in the US had limbed the most in two years. Brent lost ground overnight dropping to close at $107.64 (closing at a premium of just $19.97 to WTI, the smallest gap since Oct 19).

Interest rates
NIBOR (%)                       LIBOR (%)

O/N              14.8333           USD 1 month            0.2100
7 Day            15.1250           USD 3 month            0.3090
30 Day         15.2917            USD 4 month            0.3625
60 Day         15.5417            USD 6 month            0.5085
90 Day         15.7917            USD 12 month          0.8425
Y/Y Consumer Inflation November 2012 :            12.3%
FX Reserves: 11 December 2012 (USD bn)           44.567
MPR                                                                               12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

                             Hi            Low          Close      Prev.Close
USD/NGN  158.15/25  157.60/70  157.90/08  157.70/80

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