A Review of the Nigerian Energy Industry

Financial market update

18 February 2013, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The recent upward review of banks’ contribution from 0.3 to 0.5 percent, to the Asset Management Corporation of Nigeria (AMCON) sinking fund, will cost banks and their investors a whopping sum of N81.7 billion in the 2013 financial year, BusinessDay analysis has shown. The amount is 68 percent, or N32.7 billion higher than N49 billion the banks paid last year at 0.3 percent of their total assets.

UK: The pound had its biggest weekly drop against the dollar since June after Bank of England Governor Mervyn King said inflation will stay above the Bank’s 2 percent target for the next two years even with weak growth. The pound declined against all of its 16 major peers last week as the Confederation of British Industry, the U.K.’s biggest business lobby group, lowered its 2013 growth projection to 1 percent from 1.4 percent.

INDIA: Indian stocks rebounded after three weeks of declines. Lenders and energy companies climbed. The BSE India Sensitive Index rose 0.3 percent to 19,533.67 at 12:21 p.m. in Mumbai. Volumes on the gauge were 35 percent less than the 30-day average at this time of day.

CHINA: Beijing is set to launch its new subway metro line costing about USD 5.78 billion to ease the traffic in Chinese capital. The new line No. 16 is expected to be put into operation by the end of 2016, which will link the Yongfeng high-tech industrial base in the north with Lugouqiao town in the south, will pass through downtown Beijing, the Beijing City Subway Construction Management Company announced on Sunday.

Bonds – Trading activities picked up at the end of the week recording increased demand. We expect another round of buying next week when significant liquidity hits the market.

Bills – The absence of OMO auction last week and cash inflow this week ignited some buying interest on short-dated bills sold earlier last week now showing at attractive yields. Busy week ahead as we expect lower yields due to excess liquidity.

Money Market – Lending rates returned to previous levels to close the week at 13.255% on OBB and 13.50% on O/N. This was due to bond and FX auction funding, liquid week ahead as we expect about ngn844 45 bio to be repaid from maturing bond and bill.

Indicative Currency Exchange Rates
Bid                Offer

EURUSD            1.3340              1.3350
GBPUSD            1.5470              1.5480
USDJPY              94.04                94.44
USDCHF            0.9238             0.9258
GBPEUR            1.1595               1.1605
USDZAR            8.8450             8.9450
USDNGN           156.95              157.70
JPYNGN             1.6690              1.7190
CHFNGN            169.90             173.90
EURNGN           209.37              213.37
GBPNGN           242.80             246.80
ZARNGN            17.74               19.74

West Texas Intermediate oil fell for a second day, extending the biggest drop in two weeks. Crude for March delivery fell as much as 41 cents to $95.45 a barrel in electronic trading on the New York Mercantile Exchange. It was at $95.67 at 2:19 p.m. Singapore time.

Interest rates
NIBOR (%)                        LIBOR (%)

O/N                14.3333          USD 1 month           0.2022
7 Day              14.5833          USD 2 month          0.2465
30 Day           14.8750          USD 3 month           0.2901
60 Day           15.2500          USD 4 month          0.3446
90 Day           15.5417           USD 6 month          0.4634
USD 12 month        0.7600
Y/Y Consumer Inflation December 2012 :        12.00%
FX Reserves: 02 February 2013 (USD bn)        46.219
MPR                                                                           12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

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