A Review of the Nigerian Energy Industry

Financial market update

Financial markets10 July 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The Bill and Melinda Gates Foundation has made arrangements to establish a biotechnology laboratory in Nigeria to help build capacity in the country’s national programs and in the African region as well. The Open Forum on Agricultural Biotechnology (OFAB) Head Rose Gidado said that the announcement was made in Abuja during a courtesy call of a representative of the foundation to the Minister of Science and Technology, Prof. Ita Okon Bassey Ewa. The biotechnology laboratory will help empower national programs in Nigeria and the rest of Africa, and also train researchers in using its facilities. According to Minister Ewa, Nigerians will be able to use the laboratory to enhance national

EUROPE: Italy’s credit rating was lowered to BBB, or two levels above junk, by Standard & Poor’s because of expectations for a further weakening of economic prospects and the nation’s impaired financial system. The outlook on the rating, reduced from BBB+, remains negative yesterday. Italy’s economic output in the first quarter of 2013 was 8 percent lower than in the last quarter of 2007 and continues to fall, S&P said.

CHINA: China’s net crude purchases fell to the lowest rate in three months in June as import-dependent refineries shut for maintenance.

INDIA: Indian investors are betting for the first time since 2011 that borrowing costs will be higher in a year’s time as a collapse in the rupee rekindles inflation. One-year forward contracts, in which rates to be exchanged are agreed on 12 months in advance, climbed above the price to swap payments immediately for the first time since May 2011, according to data compiled by Bloomberg

BONDS: Yet another stable session on bonds, though current levels seem attractive it is irrelevant due to weak demand in the markets from both local and offshore accounts, monthly bond auction expected next week though not much impact on secondary activity due to low trading liquidity of the offered bonds.

BILLS: CBN issued OMO bills yesterday to manage liquidity just ahead of the primary auction today, traders continue to focus on short-dated bills due to low supply and low risk given the uncertainty in yield direction in the coming weeks.

MONEY MARKET: OBB and ON rate maintained at 10.15% and 10.25%, decent liquidity exists even after OMO auction funding, NGN 54.68 billion issued on the 226dy paper.

COMMODITIES: WTI crude advanced to a 14-month high as U.S. equities rose amid optimism about the economy and as analysts estimated that U.S. oil inventories fell last week. WTI for August delivery rose 39 cents to $103.53 a barrel on the New York Mercantile Exchange, the highest settlement since May 2, 2012.

Indicative Currency Exchange Rates
Bid        Offer
EURUSD      1.2810      1.2820
GBPUSD       1.4900     1.4910
USDJPY        100.35     100.75
USDCHF      0.9663     0.9683
GBPEUR       1.1632      1.1642
USDZAR       10.0900  10.1900
USDNGN      161.20      161.70
JPYNGN       1.6064     1.6564
CHFNGN      166.82     170.82
EURNGN      206.50    210.50
GBPNGN      240.19     244.19
ZARNGN       15.98       17.98

Commodities

WTI crude advanced to a 14-month high as U.S. equities rose amid optimism about the economy and as analysts estimated that U.S. oil inventories fell last week. WTI for August delivery rose 39 cents to $103.53 a barrel on the New York Mercantile Exchange, the highest settlement since May 2, 2012.

Interest rates
NIBOR (%)                    LIBOR (%)
O/N              10.6667        USD 1 month       0.1927
7 Day            11.0417         USD 2 month      0.2360
30 Day         11.6667         USD 3 month      0.2691
60 Day         11.8750         USD 4 month      0.3126
90 Day         12.0833        USD 6 month     0.4084
USD 12 month     0.6916
Y/Y Consumer Inflation April 2013 :         9.0%
FX Reserves: 02 July 2013 (USD bn)         47.423
MPR                                                                   12.00%
Source: FMD and CBN
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

Fx
                             Hi             Low         Close       Prev.|Close
USD/NGN  161.95/05   161.50/60   161.70/80   161.70/80

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