A Review of the Nigerian Energy Industry

Financial market update

Financial-market08 October 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: According to the Debt Management Office, its domestic debt market initiative has helped increase the inflow of foreign exchange. The initiative has significantly reduced government’s cost of borrowing and further diversification of investor-base of FGN securities.

BONDS: The week started on a bullish trend with yields coming off across the curve. The bond auction comes up next week and we expect this to give some direction to the markets.

BILLS: Yields went up across the maturities yesterday ahead of the primary auction on Thursday which is expected to boost supply into the market. No OMO auction yesterday from the Central Bank

MONEY MARKET: OBB and ON stable at 10.75% and 11% respectively with market opening up yesterday at N300 billion.

CBN RDAS AUCTION: CBN offered $300 million and sold $231.1 million. Marginal rate was 155.73 (excluding CBN 1% commission). 20 Banks bid.

US: A few faint glimmers of hope surfaced on Monday in the U.S. fiscal standoff, both in Congress and at the White House, with President Obama saying he would accept a short-term increase in the nation’s borrowing authority to avoid a default. Separately, a Senate aide said Republican Senator Rob Portman was floating a plan to cut federal spending and reform the U.S. tax code as part of a broader deal to reopen shuttered government agencies and raise the government’s debt ceiling. While Portman’s initiative may or may not gain traction, most lawmakers believe that a budget deal like it will be necessary to end the stalemate.

EUROPE: Greece will emerge from six years of recession next year, a draft budget forecast on Monday, signaling that the country is past the worst of a crippling debt crisis that nearly broke Europe’s single currency. Twice bailed-out Athens also confirmed it would post a budget surplus before interest payments this year for the first time in over a decade. The positive outlook marks a sharp reversal in fortunes for a nation that had become Europe’s problem child, lurking from one crisis to the next as it tottered close to bankruptcy and exasperated its international partners with broken promises.

CHINA: Growth in China’s services industry slowed in September and optimism over the business outlook weakened, a private survey showed on Tuesday, indicating that the nascent recovery in the world’s No. 2 economy is likely to remain a slow one. The services industry, which has so far weathered the global slowdown much better than the factory sector, is an increasingly important pillar in China’s economy, especially as the government seeks to expand domestic consumption to drive growth. Services accounted for about 45 percent of the economy in 2012 and is the biggest employer in China.

COMMODITIES: WTI oil traded near the lowest level in almost a week before data forecast to show crude stockpiles rose in the U.S. where lawmakers remain deadlocked over extending the debt limit to avoid default. WTI for November delivery was at $102.94, down 9 cents, in electronic trading on the New York Mercantile Exchange. The contract slipped 8 cents to $103.03 yesterday, the lowest settlement since October 1.

Indicative Currency Exchange Rates
Bid        Offer

EURUSD         1.3561      1.3611
GBPUSD          1.6079     1.6129
USDJPY           97.13        97.53
USDCHF         0.9053     0.9083
GBPEUR         1.1857       1.1867
USDZAR          9.9835    10.1335
USDNGN        159.75      160.50
JPYNGN         1.6447      1.6947
CHFNGN        176.46     180.46
EURNGN        216.64    220.64
GBPNGN        256.86    260.86
ZARNGN         16.00       18.00

Commodities
WTI oil traded near the lowest level in almost a week before data forecast to show crude stockpiles rose in the U.S. where lawmakers remain deadlocked over extending the debt limit to avoid default. WTI for November delivery was at $102.94, down 9 cents, in electronic trading on the New York Mercantile Exchange. The contract slipped 8 cents to $103.03 yesterday, the lowest settlement since October 1.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              11.3750       USD 1 month       0.1738
7 Day            11.8333       USD 2 month      0.2140
30 Day         13.1250       USD 3 month       0.2434
60 Day         13.4167       USD 6 month       0.3658
90 Day         13.7917        USD 12 month     0.6209
Y/Y Consumer Inflation August 2013 :       8.2%
FX Reserves: 02 October 2013 (USD bn) 45.388
MPR                                                                  12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

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