A Review of the Nigerian Energy Industry

Financial market update

Financial markets26 July 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria’s neighbour Ghana, plans to sell its second issue of $750m of Eurobonds after investors meetings in Europe and the US with yields priced over Nigeria’s latest USD bond issuance. The yield for the 10 year dollar denominated note is expected to be priced at around 8.125% which compares with 6.63% yield in the Nigeria’s sale of 10 year Eurobonds on July 2. The planned bond sale in the world’s second biggest cocoa producers follows Rwanda and Nigeria as African nations tap appetite for assets from the world’s fastest growing region after Asia.

USA : US Treasuries were set for a weekly decline before US data that may show a gauge of consumer confidence was higher than initially estimated and that home prices rose at the fastest pace in seven years. The US sold $29bn of seven year notes yesterday at 2.026%, the highest level since July 2011 and the US FED is schedule to buy as much as $1.75bn of Treasuries today maturity in Feb 2036 to May 2043 as part of its quantitative easing program intended to stimulate growth through lower borrowing costs.

EUROPE: The EURO and New Zealand dollar are emerging as the developed world currencies most vulnerable t whipsawing sentiment about how quickly the US FED will pull back from its u precedented stimulus measures. Even with benchmark interest rates at 0.5%, the ECB’s monetary policy is the tightest among the G10 currencies based on measures ranging from inflation to growth and unemployment according to certain analysts. T his leaves the EURO most at risk from further ECB actions to stimulate the region’s economy should the FED retreat.

Bonds – Continued volatility post MPC, yields up another 20bps on Thursday on average. As liquidity becomes tighter we are likely to see yields trend up further closer to the effective date of the CRR implementation on 8 August

Bills – With the primary auction closing flat on the last auction it set the secondary market up for a lot of volatility. The short end was sold aggressively as expected while demand went into the long end to moderate the sell off from yesterday’s session. The sell off on the short end will likely continue and intensity should funding levels rise when the CRR debits hit the system.

Money Market – OBB and unsecured O/N rates still averaging 10.15% and 10.25% respectively as the market remains liquid.

Indicative Currency Exchange Rates
                      Bid      Offer
EURUSD   1.3276    1.3286
GBPUSD   1.5389    1.5399
USDJPY     98.86     99.26
USDCHF   0.9293   0.9313
GBPEUR   1.1591     1.1601
USDZAR    9.7094  9.8094

USDNGN  161.00   161.75
JPYNGN   1.6286   1.6786
CHFNGN  173.25   177.25
EURNGN  213.74   217.74
GBPNGN  247.76   251.76
ZARNGN   16.58    17.33

Crude production rose to 7.56mmbpd last week, the most since December 1990, as combination of horizontal drilling and hydraulic fracturing/fracking has unlocked supplies trapped in shale formations in central US.

Interest rates
NIBOR (%)              LIBOR (%)

O/N 10.2500              USD 1 month    0.1864
7 Day 10.5417             USD 2 month    0.2289
30 Day 10.8750         USD 3 month    0.2638
60 Day 11.0417          USD 6 month    0.3965
90 Day 11.2917          USD 12 month   0.6759
Source: FMD and CBN
Y/Y Consumer Inflation June 2013 :            8.4%
FX Reserves: 24 July 2013 (USD bn)           46.87
MPR 12.00%


Hi             Low           Close       Prev.Close
   161.05/15   160.03/13  161.00/10     159.90/00

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