A Review of the Nigerian Energy Industry

Financial market update

Financial markets12 July 2013, Sweetcrude, Lagos – Local and international financial market products and services update.

NIGERIA: Nigeria expects to sign an agreement with China’s Power Construction Corp. Within a year for $20 billion investment to build power plants in the country, Olusegun Aganga, Minister of Trade and Investment said in a briefing in Beijing today. The Chinese company can recoup investments by selling power to the grid Aganga said.

Nigeria plans to re-start the sales of its distressed state-owned former telecom monopoly Nitel via a “guided liquidation” process, beginning with the appoint of a liquidator, the government’s privatisation council said. Nigeria has been trying to sell Nitel for almost a decade, struggling because of the shambolic state of its fixed-line infrastructure and high levels of debt despite the country having one of the world’s fast-growing telecoms markets.

EUROPE: Standard & Poor’s raised its outlook on Ireland’s sovereign rating today, saying the government may exceed its targets for debt reduction as the economy recovers. The ratings company lifted the outlook on the nation’s BBB+ grade to positive from stable, it said in a statement today. There is a one-in-three chance the rating will be raised in the next two years. “Ireland could over-achieve its fiscal targets and reduce its government debt faster than we currently expect,” S&P said.

CHINA: China will negotiate a bilateral investment agreement with the U.S., the first time the world’s second-largest economy has agreed to include all sectors in an accord with another country. An investment treaty with China “is a priority for the U.S and would work to level the playing field for American workers and businesses by opening markets for fair competition”.

INDIA: India’s government plans to meet as many as eight bankers as it weighs selling debt abroad to raise dollars and help steady the rupee, according to two Finance Ministry officials

BONDS: Another round of buying across the bond curve, this time riding on the news out of the US indicating a longer period of lower interest rates, the 10yr bond traded a low of 13.45% which opened the week at 13.85%, trend expected into the new week just before the monthly bond auction.

BILLS: Additional OMO issuance eased expected demand in yesterday’s session, NGN102.87 billion in supply of securities addressed all local demand not filled at the Wednesday’s auction, OMO activity continue to be a key variable in yield direction as it reflects the CBN’s desired cost of raising funds.

MONEY MARKET: OBB and ON rate at 10.15% and 10.25%.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD       1.3039       1.3049
GBPUSD        1.5132        1.5142
USDJPY         99.09        99.49
USDCHF       0.9501       0.9521
GBPEUR       1.1605        1.1615
USDZAR       9.8500       9.9500
USDNGN      161.00        161.50
JPYNGN        1.6248        1.6748
CHFNGN       169.46      173.46
EURNGN       209.93      213.93
GBPNGN        243.63      247.63
ZARNGN         16.35         18.35

WTI crude traded near a two-day low, paring a third weekly advance as U.S. jobless claims rose to the highest level in two months and the IEA said global oil supply will exceed demand next year. WTI for August delivery was at $104.88 a barrel, down 3 cents, in electronic trading on the New York Mercantile Exchange at 3:11 p.m. Singapore time.

Interest rates
NIBOR (%)                        LIBOR (%)
O/N              10.5000           USD 1 month         0.1910
7 Day            10.7500           USD 2 month         0.2335
30 Day         11.0000           USD 3 month         0.2681
60 Day         11.2500            USD 4 month         0.3126
90 Day         11.500              USD 6 month         0.4040
USD 12 month        0.6836
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.

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