A Review of the Nigerian Energy Industry

Financial market update

Financial markets23 May 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Nigeria Sovereign Investment Authority has said that it will, from next month, begin the investment of the Sovereign Wealth Fund. The Fund, which was created by an Act of the National Assembly in 2011, had an initial portfolio of $1bn. The Managing Director/Chief Executive, NSIA, Mr. Uche Orji, stated that the management board had approved the investment allocation formula for the three funds that make up the SWF. The three are the Future Generation Fund, Nigeria Infrastructure Fund and the Stabilisation Fund.

EUROPE: European stocks dropped as concern grew the Federal Reserve will scale back its stimulus measures if the U.S. economy improves and as data showed Chinese manufacturing is shrinking. The Stoxx Europe 600 Index dropped 1.6 percent to 305.52 at 8:05 a.m. in London.

INDIA: India’s rupee fell to a six-month low and bonds dropped after the Federal Reserve flagged the possibility of trimming its debt purchases, raising concern inflows to higher-yielding emerging-market assets will slow. The rupee weakened 0.6 percent to 55.8100 per dollar as of 10:11 a.m. in Mumbai and reached 55.8787, the lowest level since Nov. 26, according to data compiled by Bloomberg.

CHINA: China’s manufacturing is contracting in May for the first time in seven months, adding to signs that economic growth is losing steam for a second quarter. The preliminary reading of 49.6 for a Purchasing Managers’ Index released today compares with a final 50.4 for April. A reading above 50 indicates expansion.

Bonds –Yields opened lower on Wednesday on news that the 17s, 19s and 22s would not be re-opened in Q3 and that there is a possible reduction in issuance size in Q3. It was a stable market for most of the day after the initial dip at the open.

Bills – Bullish session on Wednesday ahead of the bill auctions. With the market liquid, rates down across the maturities. With the T-bill auction closing slightly higher than expectation we are likely to see some selling in Thursday’s session as well as some OMO offering by the CBN possibly today or Friday.

Money Market – OBB and unsecured O/N rates stable at 10.25% with the market being kept liquid by the FAAC inflow of N272 billion which came in late Monday.

CBN WDAS AUCTION- CBN offered and sold $300m. Marginal rate at 155.74 naira with 19 banks participating.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD        1.2866     1.2876
GBPUSD         1.5049    1.5059
USDJPY          101.80    102.20
USDCHF         0.9700   0.9720
GBPEUR         1.1695     1.1705
USDZAR         9.6430    9.7430
USDNGN        157.70    158.45
JPYNGN         1.5491    1.5991
CHFNGN       162.58    166.58
EURNGN       202.90   206.90
GBPNGN       237.32    241.32
ZARNGN        16.35      18.35

West Texas Intermediate oil fell for a third day, extending the biggest decline in three weeks as U.S. gasoline stockpiles gained and manufacturing in China shrank for the first time in seven months. WTI for July delivery fell as much as $1.17 to $93.11 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.25 at 2:37 p.m. Singapore time.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              10.2500     USD 1 month        0.1952
7 Day            10.5833     USD 2 month        0.2310
30 Day         10.8750      USD 3 month        0.2737
60 Day         11.2083      USD 4 month        0.3171
90 Day         11.5000      USD 6 month       0.4184
USD 12 month      0.6858
Y/Y Consumer Inflation April 2013 :         9.1%
FX Reserves: 21 May 2013 (USD bn)        48.443
MPR                                                                  12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

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