A Review of the Nigerian Energy Industry

Financial market update

22 February 2013, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Minister of Petroleum Resources has said that they might be tapping into Eurobonds as a means of financing gas infrastructure in the country. Andrew Yakubu, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) had earlier emphasized a renewed focus in the sector, which is a shift to growing the nation’s gas sector with a target of 40 million metric tonnes by 2030.

EUROPE: Euro-area consumer confidence increased to the highest in seven months in February amid signs the economy may be gaining strength after slipping into a recession last year. An index of household confidence in the currency bloc rose to minus 23.6 from minus 23.9 in January, the European Commission in Brussels said in an initial estimate yesterday. It was the third straight gain after sentiment reached a 3 1/2-year low in November.

INDIA: India, the world’s biggest gold buyer, may increase import taxes for a second time this year as it seeks to narrow a widening current-account deficit, curbing demand for bullion in jewellery and investment.

CHINA: China told local authorities to “decisively” curb real estate speculation and take steps to rein in the property market after prices rose the most in two years last month. Share of developers declined. Cities that have had “excessively fast” price gains should “promptly” impose home-purchase restrictions if they’ve not done so already, according to a statement yesterday after a State Council meeting headed by Premier Wen Jiabao.

Bonds – Very volatile session on Wednesday. Market opened bullish and then turned as profit takers came out and pushed yields up about 20bps. This was short lived as the demand in market proved greater with yields dipping again before the close. Yields generally closed higher than Tuesday but expectation is that they will still dip further in the days to come.

Bills – Bullish session yesterday ahead of the auction as market players speculated that the liquidity in the system would lead to a lower than expected cut off across the auction. Rates dipped an average 42bps and we can surely expect OMO auction in the next few days to try and mop up the liquidity in the system.

Money Market – OBB and unsecured O/N rates easy at 10.10% and 10.15% respectively as inflows from FAAC of about N286billion and maturing bonds of approximately N489billion came into the system on Tuesday keeping things.

CBN WDAS AUCTION- CBN offered and sold $120mio. Marginal rate at 155.74 naira, unchanged from previous sale on Feb. 18.

Indicative Currency Exchange Rates
Bid                 Offer

EURUSD              1.3260               1.3270
GBPUSD              1.5187                 1.5197
USDJPY               93.42                 93.82
USDCHF              0.9285               0.9305
GBPEUR              1.1452                1.1462
USDZAR              8.9026              9.0026
USDNGN             156.95                157.70
JPYNGN               1.6800               1.7300
CHFNGN             169.04                173.04
EURNGN             208.12                212.12
GBPNGN             238.36                242.36
ZARNGN             17.63                   19.63

Brent for April settlement dropped 57 cents, or 0.5 percent, to $116.95 a barrel on the London-based ICE Futures Europe exchange. The volume was 26 percent below the 100-day average.

Interest rates
NIBOR (%)                       LIBOR (%)

O/N              10.2500         USD 1 month          0.2017
7 Day            10.6667         USD 2 month          0.2455
30 Day          11.4167         USD 3 month          0.2891
60 Day          11.8750         USD 4 month         0.3436
90 Day         12.2917          USD 6 month         0.4629
USD 12 month       0.7585
Y/Y Consumer Inflation December 2012 :    12.00%
FX Reserves: 19 February 2013 (USD bn)     46.923
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  157.35/45      157.30/40      157.32/42    157.32/42

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