A Review of the Nigerian Energy Industry

Financial market update

Financial markets24 June 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The federal government has restated its commitment to entrenching the Local Content Act in the nation’s power sector, post-privatisation, to ensure local investors are given opportunity to play a role in a reformed power sector. Power minister Prof. Chinedu Nebo assured that the federal government would not allow foreigners to dominate the post- privatisation process. Nebo, who spoke at the recent commissioning of some injection sub-stations under Eko Electricity Distribution Company in Lagos, said that the present administration considers local content critical in ensuring ownership of the sector. “The PHCN workers will be involved actively when the new power sector privatisation kick-starts,” he stated, adding: “Local content is key to this present government and I’m so serious that the new power investors will not dominate the power sector market.

EUROPE: European Union leaders will this week attempt to stave off a resurgence of market tremors following a breakdown in talks on setting up unified banking rules. Euro-area bonds slumped, led by Spain and Italy, after negotiations among the 27-member bloc’s finance ministers stalled over the weekend in Luxembourg. They failed to agree on assigning losses at failing banks as part of proposed rules on bank resolution and recovery.

CHINA: China’s benchmark money-market rates tumbled for a second day, extending a retreat from record highs, on signs targeted injections of funds are being used to ease a cash crunch that threatens to worsen an economic slowdown.

INDIA: India faces growing strain to fund the widest current-account deficit in major Asian nations after the rupee slid to an all-time low on concern the U.S. will curb monetary stimulus as its economy improves.

BONDS: Fairly stable market on Friday, securities traded a 20ps range on the day, lowest volumes going through last week. With the release of the Q3 calendar from the DMO, some player’s interpretations of the reduction in issuance though not a surprise brought rates down.

BILLS: Relatively stable markets on Friday, not much activity or liquidity in the secondary markets. Some left hand side flow seen from offshore players as the de- risking continues.

MONEY MARKET: OBB and unsecured O/N rates eased for a second trading day on Friday closing at 11.50% and 11.75% ahead of the expectation of the FAAC payment which was approved Thursday after the delay caused by disputed between the Federal and State governments

COMMODITIES: WTI extended its loss for a third day amidst speculation of US scaling back economic stimulus this year and slowing growth in China. WTI fell as much as $0.29 to $94.85/bbl, while Brent was $0.10 lower at $102.05 with WTI-Brent benchmark premium at $7.14, the narrowest level since Jan 2011.

Indicative Currency Exchange Rates
Bid          Offer

EURUSD       1.3121         1.3131
GBPUSD        1.5401        1.5411
USDJPY          98.70         99.10
USDCHF        0.9380       0.9400
GBPEUR        1.1810         1.1820
USDZAR        9.7400        9.8400
USDNGN       159.25         160.00
JPYNGN        1.6135         1.6635
CHFNGN       169.78        173.78
EURNGN       208.95       212.95
GBPNGN        245.26       249.26
ZARNGN         16.35          18.35

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              12.5833       USD 1 month         0.1930
7 Day            12.8715        USD 2 month        0.2328
30 Day         13.2500       USD 3 month        0.2727
60 Day         13.5000       USD 4 month        0.3096
90 Day         13.7500       USD 6 month        0.4138
USD 12 month      0.6829
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.

                       Hi              Low             Close     Prev.Close
USD     161.  50/60    159.90/00   160.00/10   160.00/10

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