A Review of the Nigerian Energy Industry

Financial market update

Financial markets27 September 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Impressed with the ongoing transformation at the Nigerian Stock Exchange (NSE) and investment potential in the economy, the British High Commissioner to Nigeria, Dr. Andrew Pocock, Wednesday assured the management of the exchange of further cooperation that would attract more UK investments into the country. Speaking during his visit to the exchange, where he rang the closing bell, Pocock said the UK had been involved in the Nigerian capital market, trade and other forms of commercial activities for many years. According to him, UK sees Nigeria as a country with great potential especially in the area of extractive industry, manufacturing and services sectors.

BONDS: Market opened bullish in an attempt to reflect the lower than expected cut-off levels at the treasury bills auction on Wednesday. The rally was however unsustainable as the market gave way to the bears towards close. As at close, yields inched up slightly higher than the previous close.

BILLS: T-bills trading saw buying activities across all maturities, with higher demands for the longer-dated bills. Market yields however retraced towards end of trading to close at near market opening levels.

MONEY MARKET: OBB rates averaged 12% and ON rate 12.25%. Inter-bank rates reverted from the high levels seen on Wednesday due to funding requirements for WDAS.

US: U.S. House of Representatives Republicans on Thursday refused to give in to President Obama’s demand for straightforward bills to run the government beyond September 30 and to increase borrowing authority to avoid a historic default. In a direct challenge to Obama, they said they will seek not only a one-year delay in the full implementation of the national healthcare law known as “Obamacare” in return for raising the debt ceiling, but also seek a Republican wish-list of tax measures, energy bills, regulatory proposal and spending cuts that Democrats have already refused to endorse. President Obama said he will not negotiate over the debt ceiling at all.

EUROPE: German inflation was probably unchanged at a three-month low in September, helping bolster domestic consumption in the country. Annual consumer-price growth, calculated using a harmonized European Union method, was 1.6 percent, according to reports. That matches the August level, when inflation was the lowest since May. Prices were unchanged from the previous month, reports show. The Bundesbank said this week that slowing inflation is helping to support an “extraordinarily good” consumer climate in Germany. The European Central Bank forecasts that prices in the 17-nation euro area, Germany’s biggest trading partner, will stay contained amid a gradual economic recovery.

CHINA: China will probably wait at least two years before requiring banks to pay market rates on deposits as officials seek to avoid disrupting the banking system while the economy is slowing. Policy makers will remove all restrictions on deposit rates in 2016 or later, according to analysts. Analysts suggested that such a move could cut net interest margins, a measure of loan profitability, by at least 50 basis points and smaller banks will be the hardest hit.

COMMODITIES: WTI was poised for a third weekly loss as the five permanent member of the UN Security Council agreed on a resolution to eliminate Syria’s chemical weapons, dimming the threat of widening conflict in the Middle East. WTI for November delivery fell as much as 47 cents to $102.56 in electronic trading on the New York Mercantile Exchange.

Indicative Currency Exchange Rates
Bid          Offer

EURUSD           1.3491        1.3541
GBPUSD           1.6091        1.6141
USDJPY             98.63         99.03
USDCHF          0.9089        0.9119
GBPEUR          1.1927          1.1937
USDZAR           9.9935       10.1435
USDNGN          161.05         161.80
JPYNGN           1.6329         1.6829
CHFNGN           177.19         181.19
EURNGN         217.27          221.27
GBPNGN          259.15         263.15
ZARNGN           16.12            18.12

Commodities
WTI was poised for a third weekly loss as the five permanent member of the UN Security Council agreed on a resolution to eliminate Syria’s chemical weapons, dimming the threat of widening conflict in the Middle East. WTI for November delivery fell as much as 47 cents to $102.56 in electronic trading on the New York Mercantile Exchange.

Interest rates
NIBOR (%)                      LIBOR (%)

O/N               12.4167         USD 1 month          0.1791
7 Day            12.7500         USD 2 month          0.2180
30 Day         13.0000        USD 3 month          0.2481
60 Day         13.2500         USD 6 month         0.3675
90 Day         13.5417          USD 12 month       0.6311
Y/Y Consumer Inflation August 2013 :            8.2%
FX Reserves: 24 September 2013 (USD bn)  45.782
MPR                                                                        12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

Fx
Hi               Low           Close        Prev.Close
USD/NGN
          161.87/97   160.00/10  161.55/65     160.00/10

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