A Review of the Nigerian Energy Industry

Financial market update

Financial-market03 July 2013, Sweetcrude, Lagos – Local and international financial market products and services update
NIGERIA: Nigeria returned to the international bond market for the first time in two years with a $1 billion sale of Eurobonds, raising funds for power projects amid sell off in emerging market debt. Nigeria issued $500 million of 5-year notes to yield 5.375 percent and $500 million of 10-year securities at 6.625 percent yesterday, according to data compiled by Bloomberg. In January 2011, the nation paid 6.75 percent on dollar debt due 2021 in its first overseas offering and the yield on the securities surge a record 133 basis points in June to 6.02 percent. Demand is waning after the Federal Reserve signaled in May and June plans to rein in $85 billion a month of assets purchases that drop borrowing costs to record lows and fueled demand for emerging market assets

EUROPE: Portuguese bonds slumped, pushing 10- year yields above 7 percent for the first time this year, after two of the nation’s ministers resigned from the government amid mounting austerity fatigue. Spanish and Italian securities dropped for a second day after Portuguese Prime Minister Pedro Passos Coelho told voters in a televised speech from Lisbon yesterday he’s trying to hold his government together.

CHINA: Emerging-market stocks fell, heading for the biggest drop in more than a week, as growth in Chinese service industries slowed and consumer shares sank amid surging oil prices. The MSCI Emerging Markets Index lost 1.6 percent to 916.99 at 2:56 p.m. in Hong Kong, poised for the biggest drop since June 24. Oil’s surge, sparked by political turmoil in Egypt and an industry report showing U.S. stockpiles shrank, threatens to curb consumer spending power and spur inflation for energy- importing countries such as China and India.

BONDS: Another fairly quiet session yesterday, rates up about 4bps on average on the curve. No significant flows from offshore players in recent times. Yields trading a tight range in the last three sessions. With Nigeria’s Eurobond rumoured to be three times oversubscribed it will be interesting to see if some of this demand for Nigeria risk feeds into the local currency denominated bonds.

BILLS: With the CBN again failing to sell any of the N90billion they offered in OMO bills yesterday, the demand which has been ignored at the last two OMO auctions hit the market and rates came off about 20bps particularly on the longer dated maturities, where supply is lowest.

MONEY MARKET: OBB and unsecured O/N rates eased to close at 10.15% and 10.25% respectively as an inflow of about N60billion attributed to SURE-P came in to improve liquidity. The CBN came out again today to offer N90billion in OMO bills but still failed to make any sale.

COMMODITIES: Crude oil surged, with West Texas Intermediate exceeding $100 a barrel for the first time in nine months, on shrinking U.S. stockpiles and concern political turmoil in Egypt will lead to Middle East supply disruptions.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD      1.2933        1.2943
GBPUSD      1.5166         1.5176
USDJPY        99.81         100.21
USDCHF      0.9501       0.9521
GBPEUR      1.1810        1.1820
USDZAR      9.8900      9.9900
USDNGN     159.70       160.45
JPYNGN      1.6000      1.6500
CHFNGN     168.09      172.09
EURNGN     206.54      210.54
GBPNGN     242.20      246.20
ZARNGN      16.15          18.15

Crude oil surged, with West Texas Intermediate exceeding $100 a barrel for the first time in nine months, on shrinking U.S. stockpiles and concern political turmoil in Egypt will lead to Middle East supply disruptions.

Interest rates
NIBOR (%)                       LIBOR (%)
O/N              10.3330          USD 1 month        0.1952
7 Day            10.7083          USD 2 month       0.2369
30 Day         10.9583          USD 3 month       0.2729
60 Day         11.2083           USD 4 month      0.3126
90 Day         11.4583           USD 6 month       0.4144
USD 12 month     0.6815
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.

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