A Review of the Nigerian Energy Industry

Financial market update

Financial markets18 November 2013, Sweetcrude, Lagos – Local and international financial markets products and services update.
NIGERIA: Nigeria’s economic growth quickened in the third quarter as the oil industry’s contraction eased and agricultural output increased. Gross domestic product rose 6.81 percent on an annual basis, the fastest pace this year, compared with 6.18 percent in the second quarter, the Abuja-based National Bureau of Statistics said. While disruptions to Nigerian oil exports continued in Africa’s second-largest economy, daily average crude oil production rose to 2.26 million barrels from 2.11 million barrels in the previous quarter. Crude output declined from 2.52 million barrels a day in the third quarter of 2012.

BONDS: Friday’s trading saw the average yield move modestly higher by 3bps to 12.66%, with the Jan 22s increasing by 5bps. We expect to see continued pressure in the bond market as profit-taking activities affect the secondary market trading.

BILLS: Mixed sentiments across the curve, as we saw the short end very offered pushing yields higher in line with the move in the cash money market (as liquidity tanks to NGN70Bio). The rest of the curve slipped lower offseting the hike in the short end leaving average yields flat at 11.84%. Action packed week ahead as we have the MPC meeting, Budget speech and Tbill auctions

MONEY MARKET: OBB and ON rates hiked to 13.50% and 13.75% as liquidity squeezes lower again. We expect this move to be short lived as we have inflows from FAAC coming this week.”

US: U.S. interest-rate swap levels narrowed to the lowest in a year relative to Treasuries as traders sought higher-yielding assets outside of government debt on bets Janet Yellen will keep borrowing costs down. The difference between the five-year Treasury rate and similar-maturity swap narrowed to 9.88 basis points, the least since November 2012, based on closing levels.

EUROPE: Mario Draghi won’t follow his unexpected interest-rate cut with new liquidity injections into the financial system next month, economists say. The ECB’s surprise policy move this month has taken the benchmark rate to a record low of 0.25 percent. That’s sparked speculation among economists and investors how far policy makers are prepared to go if inflation, already less than half of the ECB’s target, slows further, or the economic recovery weakens

CHINA: New home prices in China’s four major cities rose the most since January 2011, raising concerns of a bubble as home buyers were emboldened by a lack of new nationwide property curbs.

COMMODITIES:
West Texas Intermediate fell, extending the longest stretch of weekly losses since 1998, as Saudi Arabia exported the most oil in eight years. for December delivery slid as much as 46 cents to $93.38 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.52 at 3:45 p.m. Singapore time.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD        1.3500       1.3550
GBPUSD         1.6125       1.6175
USDJPY          99.96        100.36
USDCHF        0.9139       0.9169
GBPEUR         1.1944       1.1954
USDZAR       10.1400     10.2900
USDNGN        158.20      158.50
JPYNGN         1.5826       1.6326
CHFNGN        173.10       177.10
EURNGN        213.57       217.57
GBPNGN        255.10       259.10
ZARNGN         15.60          17.60

Commodities
West Texas Intermediate fell, extending the longest stretch of weekly losses since 1998, as Saudi Arabia exported the most oil in eight years. for December delivery slid as much as 46 cents to $93.38 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.52 at 3:45 p.m. Singapore time.

Interest rates
NIBOR (%)                        LIBOR (%)
O/N              11.8750            USD 1 month         0.1675
7 Day            12.2917            USD 2 month        0.2070
30 Day         12.6250           USD 3 month        0.2381
60 Day         12.8750           USD 6 month        0.3514
90 Day         13.1250            USD 12 month      0.5881
Y/Y Consumer Inflation September 2013 :       8.0%
FX Reserves: 11 November 2013 (USD bn)     44.954
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        159.30/40   158.59/69  158.70/80    159.10/20

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