A Review of the Nigerian Energy Industry

Financial market update

Financial markets29 July 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Deposit Money Bank’s credit to the agriculture sector may have risen to over 3.7% according to the CBN. According to a statement by the apex bank, this figure which is for 2012 indicates an increase of 85% over the 2% growth of the agricultural sector share of bank’s credit five years ago. It is expected that under Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) collaboration between banks and counterpart will push loans under guarantee.

NIGERIA: Nigeria earned USD42bn revenue from crude oil export between January and June 2013. Nigeria earned higher income from crude oil export compared to Angola which earned USD68bn in 2012 and USD33bn between January and June 2013.

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 European Central Bank and Bank of England are emulating Ben S. Bernanke’s experiment in offering monetary policy guidance to financial markets. US 10 yr treasury yields have swung from 1.63% to 2.74% during the last three months as the FED Chairman struggled to provide a clearer picture of when and why the CBN will reduce then end its asset purchases. More communication mishaps are likely as the ECB and BOE strive to get their messages across the market. All three authorities meet separately this week with the FED on July 30 and the ECB and BOE announcing policy decisions on Aug 1.

CHINA: The Chinese central government has decided to cap China’s deficit-GDP ratio at 3%, aiming to avert a downgrade of China’s credit rating by international rating agencies according to sources. China will start a nationwide audit of government debt this week as the threat to growth and the financial system increase from a record deficit boom. The first audit of local government debt found liabilities of 10.7trn yuan (USD1.8trn) at the end of 2010 and currently estimated at 11-12trn Yuan or 20% of GDP.

INDIA: The Reserve Bank of India has chosen to support the Rupee as a top priority states SBI Chairman Pratip Chaudhuri. Prime Minister Manmohan Singh meets with Industry leaders today to discuss the current account deficit, the slide of the rupee and how to review industrial growth. India’s economy grew at 5% in the year ended March 31, the slowest pace in a decade. The Sensex fell last week after the RBI tightened banks’ access to cash on July 23 to stead the nation’s currency.

Indicative Currency Exchange Rates
Bid       Offer

EURUSD     1.3279     1.3289
GBPUSD     1.5383     1.5393
USDJPY      97.79       98.19
USDCHF     0.9283    0.9303
GBPEUR     1.1582     1.1592
USDZAR     9.7681     9.8681
USDNGN    159.75     160.75
JPYNGN     1.6336    1.6836
CHFNGN    172.09    176.09
EURNGN    212.13     216.13
GBPNGN    245.74     249.74
ZARNGN    16.35        17.10
EURUSD    1.3042
GBPUSD    1.5288     1.5298
USDJPY     98.10       98.50
USDCHF    0.9432    0.9452
GBPEUR    1.1820    1.1830
USDZAR    10.1100  10.2100
USDNGN   160.90   161.65
JPYNGN    1.6402    1.6902
CHFNGN   170.59     174.59
EURNGN   209.68   213.68
GBPNGN    245.98   249.98
ZARNGN    15.91       17.91

Crude remained relatively unchanged last Friday, with Brent settled $0.48 lower to $107.17/bbl, and WTI settled $0.79 lower to $104.70/bbl.
Singapore fuel oil continue to fall last Friday, as HSFO180 deepened into a contango structure, suggesting ample of supply for the month of August. On the other hand, Asian gasoil remained steady, with strong African demand and low exports from China making up for the lack of demand from the Middle East post Ramadan.
Association of Asia Pacific Airlines showed sustained growth in international passenger traffic for the month of June, but noted continued weakness in air cargo demand. Total number of international passengers carried in June increase by 7.1% y/y to 18.3m, but passenger load factor was down due to a 6.4% increase in seat capacity.

Interest rates
NIBOR (%)                       LIBOR (%)

O/N              10.2400          USD 1 month    0.1864
7 Day            10.5417           USD 2 month    0.2275
30 Day         10.8583          USD 3 month    0.2650
60 Day         11.0417           USD 6 month    0.3955
90 Day         11.2917            USD 12 month  0.6737
Y/Y Consumer Inflation June 2013 :  8.4%
FX Reserves: 24 July 2013 (USD bn) 46.87
MPR 12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

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