A Review of the Nigerian Energy Industry

Financial market update

Financial-market11 June 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, on Sunday, put the nation’s external debt at $6.67 billion, (about N1.035 trillion). Nigeria spent $8.0429 billion to service debt in 2006 and $10.1072 billion in 2005 before the debt relief of 2006. However, the Minister said that the clarification became necessary in view of the various figures being quoted in the debate over the nation’s indebtedness.

EUROPE: European stocks slipped as the Bank of Japan refrained from expanding stimulus and a German court began hearings on the European Central Bank’s bond-buying plan. The Stoxx Europe 600 Index fell 0.5 percent to 293.77 at 8:04 a.m. in London.

INDIA: The slump in the rupee to a record low has narrowed the Reserve Bank of India’s scope to cut interest rates next week for a fourth straight meeting. The rupee reached its weakest level today, weighed down by an unprecedented current-account deficit, the slowest Indian economic expansion in a decade and speculation the dollar will gain if the U.S. scales back monetary stimulus. The rupee weakened 1.2 percent to 58.8350 per dollar in Mumbai today.

UK: U.K. borrowing costs are the highest in more than three months as the nation seeks buyers for 6 billion pounds ($9.3 billion) of government bonds this week amid waning demand from overseas investors.

Bonds – There seems to be no current end in sight for the upward movement of yields which continued again yesterday. Extreme volatility and very fragmented markets with only a handful of trades going through before market shut abruptly. Activity was fueled by the usd/ngn interbank market which has been under immense pressure of late trading up to 160.50/60 before falling to close at 158.75/85 as the Central Bank stepped in to intervene by hitting bids in the market.

Bills – CBN came out to offer N50billion in 136day bills selling only N13.5billion at 12.10% as they attempt to mop up some of the liquidity in markets. A volatile session in the markets on Monday as rates went up 30bps in continued reaction to sentiment that has driven market direction. with Rates breaching the 14% levels on the long end we might begin to see renewed interest.

Money Market – OBB and unsecured O/N opened on Monday at 10.25% and 10.50% with the market opening up N128 billion yesterday.

CBN WDAS AUCTION- CBN offered and sold $300m. Marginal rate at 155.75 naira, unchanged from previous sale on June 5.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD          1.3278      1.3288
GBPUSD          1.5545       1.5555
USDJPY            98.12        98.52
USDCHF          0.9315      0.9335
GBPEUR          1.1707       1.1717
USDZAR          10.252      10.3524
USDNGN         158.65      159.40
JPYNGN          1.6169       1.6669
CHFNGN         170.32      174.32
EURNGN         210.66      214.66
GBPNGN          246.62     250.62
ZARNGN         15.47          17.47

West Texas Intermediate crude fluctuated after snapping a three-day gain. A government report tomorrow is forecast to show U.S. stockpiles increased while refinery run rates advanced a second week. WTI for July delivery was at $95.75 a barrel, down 2 cents in electronic trading on the New York Mercantile Exchange at 4:46 p.m. Sydney time.

Interest rates
NIBOR (%)                     LIBOR (%)

O/N              10.9167         USD 1 month        0.1925
7 Day            11.3333         USD 2 month        0.2306
30 Day         11.8333         USD 3 month        0.2741
60 Day         12.0833        USD 6 month        0.4112
90 Day         12.4167         USD 12 month       0.6832
Y/Y Consumer Inflation April 2013 :            9.1%
FX Reserves: 07 June 2013 (USD bn)          48.425
MPR                                                                     12.00%

Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

Hi               Low            Close       Prev.Close
      160.50/60    158.75/85    158.75/85  159.70/80

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