A Review of the Nigerian Energy Industry

Financial market update

Financial-market24 October 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: The FG has formally inaugurated a new electricity transmission sub-station constructed in Karu, Abuja under the World Bank inspired National Energy Development Project (NEDP). According to analysts, this project will certainly act as a catalyst for the development of small and medium scale businesses, promoting industrial growth in these areas, and subsequently, impacting positively on the well-being and overall living standards of individual families.

BONDS: Choppy price action in the markets but the bulls managed to sustain the run pushing yields about 2bps lower. We still see decent demand across maturities.

BILLS: Very bullish sentiments yesterday with the whole curve shifting lower by an average 15bps. We expect to see a move lower again today, barring the CBN offering OMO bills at auction to mop up liquidity in the system currently at N500Bio. Biweekly auction yields came in lower than previous cut-off led by demand.

MONEY MARKET: OBB and ON rates remained unchanged at 10.25% and 10.50% respectively. Market liquidity at about N500 billion.

CBN RDAS AUCTION: CBN offered $300 million and sold $296.45 million. Marginal rate was N156.07/US$ (excluding CBN 1% Commission). 21 banks bid.

US: Banks would have to hold enough easy-to-sell assets to survive a 30-day credit drought under a rule to be proposed today by the Federal Reserve that may have the greatest effect on banks with big trading operations. The demand for 30 days of liquidity is intended to satisfy global Basel III accords for strengthening the financial system. Increasing the banks’ liquid assets is meant to make them less vulnerable in a crisis like the one that struck in 2008.

EUROPE: Eurozone debt burden rose further in the second quarter, official figures showed Wednesday, despite years of austerity that one prominent European Union economist says intensified the financial crisis. Eurostat, the EU’s statistics office, said debt across the 17 countries that use the euro rose to 93.4 percent of the Eurozone’s annual gross domestic product from 92.3 percent the previous quarter.

CHINA: China’s benchmark money-market rate rose the most since July while the Shanghai Composite Index fell to a three-week low as policy makers drained cash from the financial system amid signs of a pickup in the economy. The seven-day repurchase rate, a gauge of funding availability in the banking system, surged 65 basis points to 4.67 percent in Shanghai.

COMMODITIES: WTI crude rose for the first time in four days as a measure of China’s economic recovery topped forecasts, signalling increased demand in the world’s second biggest oil consumer. WTI for December delivery climbed as much as 73 cents to $97.59 a barrel in electronic trading on the New York Mercantile Exchange.

Indicative Currency Exchange Rates
Bid           Offer

EURUSD       1.3814        1.3864
GBPUSD       1.6208        1.6258
USDJPY         97.45          97.85
USDCHF        0.8908      0.8938
GBPEUR        1.1733        1.1743
USDZAR        9.7015        9.8515
USDNGN       158.80       159.55
JPYNGN        1.6296        1.6796
CHFNGN       178.27        182.27
EURNGN       219.37        223.37
GBPNGN       257.38        261.38
ZARNGN        16.37          18.37

Commodities
WTI crude rose for the first time in four days as a measure of China’s economic recovery topped forecasts, signalling increased demand in the world’s second biggest oil consumer. WTI for December delivery climbed as much as 73 cents to $97.59 a barrel in electronic trading on the New York Mercantile Exchange.

Interest rates
NIBOR (%)                       LIBOR (%)

O/N              10.5417            USD 1 month        0.1702
7 Day            11.0000           USD 2 month       0.2098
30 Day         11.8333            USD 3 month       0.2384
60 Day         12.2083           USD 6 month       0.3557
90 Day         12.5000           USD 12 month     0.6086
Y/Y Consumer Inflation September 2013 :   8.0%
FX Reserves: 22 October 2013 (USD bn)     45.133
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
      159.52/62   158.80/90   158.80/90    159.50/60

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