A Review of the Nigerian Energy Industry

Financial market update

Financial markets16 May 2013, Sweetcrude, Lagos – Local and international financial market services update.
NIGERIA: Nigeria approved a debt-management plan that will allow it to reduce short-term domestic borrowing in favour of cheaper, longer-term foreign loans, Minister of State for Finance Yerima Ngama said. The strategy, which will run from this year to 2015, will increase foreign borrowing to about 40 percent of total debt from the current 14 percent, he told reporters in Abuja, the capital, yesterday. Nigeria’s domestic debt currently stands at 6.49 trillion naira ($41 billion), or 86 percent of the total owed as at March 31, according to the website if the Debt Management Office.

EUROPE: European stocks were little changed after the benchmark Stoxx Europe 600 Index yesterday extended its highest level since June 2008. The Stoxx 600 slipped 0.2 percent to 307.55 at 8:07 a.m. in London after rising for a second day yesterday. The equity benchmark has rallied 10 percent so far in 2013, its best start to a year since 1998, as central banks around the world maintained their stimulus measures.

INDIA: India’s benchmark stock index extended gains to the highest in more than two years as foreign funds added to their holdings of local shares. The S&P BSE Sensex advanced 0.3 percent to 20,276.26 at 11:35 a.m. in Mumbai

CHINA: Foreign direct investment in China lagged behind analysts’ estimates in April, highlighting concern at the growth outlook for the world’s second-biggest economy after an unexpected slowdown last quarter. Investment rose 0.4 percent from a year earlier to $8.4 billion, the Ministry of Commerce said in a statement today in Beijing. That was less than the 5.7 percent gain in March.

Bonds – A sell off yesterday ahead of the bond auction. Interest at the auction appeared to be weak with very little interest from both on and offshore players. This sentiment led to the selling which saw yields go up about an average 40bps on the 15s and 17s, about 20bps on the 19s and 10bps on the 22s. We will likely see some selling today, the MPC meeting on Monday/Tuesday and the possibility of a rate cut the only thing that will feed some demand into the market.

Bills – Another day of light selling yesterday as the market continues to feel the squeeze in liquidity with O/N interest rates rising. No OMO activity from the Central bank.

Money Market – OBB and unsecured O/N rates up 75bps to 14.50% & 14.75% respectively as liquidity levels drop, market opened up N14billion but with an expectation of funding for WDAS of N46billion rates. There is an OMO maturity today of about N261 billion and this should push rates lower.

CBN WDAS AUCTION- CBN offered $300m and sold $207.7m. Marginal rate at 155.74 naira unchanged from previous sale on May 13.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD          1.2852        1.2862
GBPUSD           1.5199        1.5209
USDJPY            102.42       102.82
USDCHF          0.9700       0.9720
GBPEUR          1.1825         1.1835
USDZAR          9.3048        9.4048
USDNGN         156.95         157.70
JPYNGN          1.5324         1.5824
CHFNGN         161.80        165.80
EURNGN         201.71         205.71
GBPNGN          238.55       242.55
ZARNGN          16.87          18.87

West Texas Intermediate crude fell for the fifth time in six days amid signs of economic weakness in the U.S.
and Europe that threaten fuel demand. WTI for June delivery lost as much as 71 cents to $93.59 a barrel in
electronic trading on the New York Mercantile Exchange and was at $93.60 at 3:16 p.m. in Singapore.

Interest rates
NIBOR (%)                    LIBOR (%)

O/N              15.3750       USD 1 month           0.1982
7 Day            15.6250       USD 2 month           0.2350
30 Day         15.7917        USD 3 month           0.2741
60 Day         16.0417        USD 4 month          0.3166
90 Day         16.2917        USD 6 month          0.4209
USD 12 month        0.6898
Y/Y Consumer Inflation March 2013 :           8.6%
FX Reserves: 10 May 2013 (USD bn)            48.601
MPR                                                                      12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

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