A Review of the Nigerian Energy Industry

Financial market update

Financial-market05 August 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Yields on Nigerian debt are expected to rise next week amid tighter liquidity as the Central Bank withdraws cash from the banking system under a new reserve requirement. CBN hiked cash reserves for public sector deposits to 50 percent from 12 percent last week and plans to withdraw the cash from the banking system. The yield on the April 2015 bond was trading at 14.23 percent on Friday, from 13.99 percent at the start of the week, while the January 2022 issue was trading at 13.74 percent compared with 13.64 percent on Monday.

US: Two years after Standard and Poor’s stripped the U.S. of its top rating, America’s credit quality is getting a boost from economic growth outpacing that of the 12 nations graded AAA. The gap between Treasury five- and 10-year note yields is wider than that for the higher-rated sovereigns, showing fixed- income investors anticipate the U.S. will grow faster than its peers, according to data compiled by Bloomberg.

EUROPE: Europe’s riskiest corporate borrowers are proving a haven for bond buyers who are more skittish about facing losses from rising interest rates in the U.S. than defaults in the region’s periphery. Investors funnelled $113.6 million into European high-yield bond funds in the week ended July 31 while yanking $567.3 million from similar funds in the U.S., EPFR Global data show.

CHINA: China’s economy is showing signs of stabilizing after slowing for two straight quarters, with official manufacturing and services indexes rising and gains in gauges of business expectations

BONDS: Some demand hit the market on Friday creating some volatility. Interests were primarily in the 15s and 19s. Expectation is that ahead of the CRR debits on Wednesday we will likely see some selling as market participants aim to position for increase funding costs as the market goes short.

BILLS: Bearish markets opened on Friday with rates rising about 40bps but demand came in to take rates down about 20bps. Players were trying to raise liquidity on the short end ahead of this week’s CRR debit where the increased requirement for public sector funds takes effect. Rates were up about 70bps below 91 days, 40bps around the 182day and about 30bps out to one year.

MONEY MARKET: OBB and unsecured O/N rates remained flat at 10.25%. The markets remain liquid opening up N755billion on friday.”

Indicative Currency Exchange Rates
Bid        Offer
EURUSD       1.3288     1.3298
GBPUSD        1.5306    1.5316
USDJPY         98.34       98.74
USDCHF       0.9281    0.9301
GBPEUR       1.1519     1.1529
USDZAR       9.8600   9.9600
USDNGN      159.68    160.18
JPYNGN       1.6238    1.6738
CHFNGN      172.05    176.05
EURNGN      212.18     216.18
GBPNGN      244.41     248.41
ZARNGN        16.19      18.19

WTI oil crude swung between gains and losses as signs that China’s economy is stabilizing countered concern that the recovery may falter in the U.S. WTI for September delivery was at $107.17 a barrel in electronic trading on the New York Mercantile Exchange, up 23 cents. The volume of all futures traded was 0.8 percent above the 100-day average. The contract slid 95 cents to $106.94.

Interest rates
NIBOR (%)                      LIBOR (%)
O/N             10.6667           USD 1 month       0.1859
7 Day           11.4167            USD 2 month       0.2279
30 Day        11.7083           USD 3 month       0.2666
60 Day        12.0000          USD 6 month       0.3965
90 Day       12.4583           USD 12 month      0.6742
Y/Y Consumer Inflation June 2013 :            8.4%
FX Reserves: 17 July 2013 (USD bn)            46.923
MPR                                                                     12.00%
Source: FMD and CBN
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.
                                 Hi             Low           Close         Prev.Close
USD/NGN     160.20/30    159.80/90   160.10/20     159.68/78

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