A Review of the Nigerian Energy Industry

Financial market update

Financial markets20 June 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Slowing progress on government reforms before 2015 elections in Nigeria is keeping the country from getting a better credit rating according to Fitch Ratings. “We are clearly in a pre-election period now in Nigeria and we have seen a slowdown on the reform front,” Richard Fox, Fitch’s London-based head of Middle East and Africa Sovereign ratings, said on a conference call yesterday. “We judge Nigeria by what they achieve and some of their more ambitious plans may not come to fruition until after the election.” Fitch’s comments come a month after Moody’s Investors Service said Nigeria’s slow implementation of structural economic reforms is limiting its chances of credit-rating upgrade, along with corruption, weak institutions and vulnerability to oil-price drops. Fitch rates Nigeria at BB-, three levels below investment grade.

EUROPE / US: Federal Reserve Chairman Ben S. Bernanke is putting investors on notice that the central bank is prepared to begin phasing out one of the most aggressive easing programs in its century-long history later this year. The Fed will probably taper its $85 billion in monthly bond buying later in 2013 and halt purchases around mid-2014 as long as the world’s largest economy performs in line with Fed projections, Bernanke said to reporters yesterday in Washington after a two-day meeting of the Federal Open Market Committee.

CHINA: The size of China’s shadow banking industry may have started to shrink following the curbs, with official data on June 9 showing trust loans fell to 99.2 billion yuan in May. This accounted for 8.4 percent of aggregate financing, down from 16 percent in December

BONDS: Volatile day with yields bouncing around intra-day and finally closing up 10bps yesterday. As with all global markets, the FOMC statement is eagerly awaited as it will chart direction after the panic hit the markets on suspicion that the fed was going to reverse its easy monetary policy stance.

BILLS: A surprise addition to the bill auction yesterday as the Central Bank on instruction from the DMO came out to offer N40billion in one year bills to make up for the shortfall from the last bond auction. Volatility in the market with rates ultimately closing higher.

MONEY MARKET: OBB and unsecured O/N rates went up yesterday closing at 15.25% and 15.50% respectively as liquidity levels dropped intraday. The market opened up N25billion but N87billion went out in WDAS/CBN intervention settlements causing the spike in rates. The FAAC payment is still delayed due to political wrangling

COMMODITIES: West Texas Intermediate crude fluctuated after the Federal Reserve said it will keep buying bonds at a pace of $85 billion a month and as a government report showed U.S. inventories rose last week. Prices traded in a 98-cent range.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD      1.3251        1.3261
GBPUSD      1.5444        1.5454
USDJPY        97.86         98.26
USDCHF      0.9307       0.9327
GBPEUR      1.1704        1.1714
USDZAR      10.2200     10.3200
USDNGN     159.00       159.50
JPYNGN      1.6248        1.6748
CHFNGN     170.84        174.84
EURNGN     210.69       214.69
GBPNGN      245.56       249.56
ZARNGN      15.56         17.56

Commodities
West Texas Intermediate crude fluctuated after the Federal Reserve said it will keep buying bonds at a pace of $85 billion a month and as a government report showed U.S. inventories rose last week. Prices traded in a 98-cent range.

Interest rates
NIBOR (%)                      LIBOR (%)

O/N              16.3483          USD 1 month       0.1916
7 Day            16.4583          USD 2 month      0.2289
30 Day         16.7083          USD 3 month      0.2718
60 Day         16.9583          USD 4 month      0.3081
90 Day         17.1250           USD 6 month      0.4092
USD 12 month    0.66812
Y/Y Consumer Inflation April 2013 :            9.1%
FX Reserves: 06 Junel2013 (USD bn)         48.423
MPR                                                                     12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

Fx
Hi              Low            Close        Prev.Close
USD/NGN
      160.63/73   159.70/80   159.75/85     159.95/05

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