A Review of the Nigerian Energy Industry

Financial market update

Financial markets25 November 2013, Sweetcrude, Lagos – Local and international financial markets products and services update.
NIGERIA: Recently, the DMO said it will be sustaining its initiatives in the market, by further diversifying the debt instruments available in the market and the investor base, through the issuance of Diaspora Bond and FGN Bonds in GDN format. According to the DG of the DMO, arrangements are being finalized for the installation of an Automated IT platform for the FGN Debt securities market, which is expected to further enhance market efficiency in the domestic debt market.

BONDS: Bond trading saw buying activities in the less than one year bonds and selling activities in the longer-dated bonds, thus causing a flattening of the yield curve as average yields declined by 1bps to 12.30%. June 2019 accounted for the bulk of the increase of 11bps and the less than one year of the curve accounted for the bulk of the decline ranging from 7bps to 24bps.

BILLS: The T-Bill extended gains as yields contracted by 13bps to 11.63% on average across the curve. The decline was widespread, as investors bought across the tenors with rates falling on all maturities. As expected, CBN came in on Friday morning with another batch of OMO auction to mop up liquidity from maturing treasury bills on thursday and government’s distribution of its monthly oil revenue, selling N47.6B on the 132D and N131B on the 153D maturity.

MONEY MARKET: OBB and ON rates increased slightly by 25bps to 10.50%. Liquidity in the system now slightly lower to about N403billion.

US: leading US banks have warned that they could start charging companies and consumers for deposits if the US federal reserve cuts the interest it pays on ban reserves. Depositors already have to cope with near-zero interest rates, but paying just to leave money in the bank would be highly unusual and unwelcome for companies and households. The warning by bank executives highlights the dangers of one strategy the Fed could use to offset an eventual tapering of the $85 billion a month in asset purchases that have fuelled global financial markets for the last year.

EUROPE: Inflation stayed close to the lowest level in almost four years in November with a reading of 0.8 percent, according to the median prediction of 44 economists polled by Bloomberg News. Data published at the same time on Nov. 29 might also reveal the euro-area jobless rate remained at a record 12.2 percent. Those reports precede quarterly forecasts that the European Central Bank president will present next week, heralded as an opportunity to help explain the Nov. 7 rate cut to 0.25 percent. Draghi said at the time that the region needs record-low borrowing costs to combat a “prolonged” period of weak inflation and “very high” unemployment, while board member Benoit Coeure said today the bank would act again if inflation continued to fall.

CHINA: China’s benchmark money-market rate fell to a one-week low after the central bank’s cash injections last week bolstered speculation it won’t tolerate a cash crunch as the end of the month approaches. The People’s bank of China asked commercial banks to submit orders for 91-day bills, 28-day repurchase agreements, as well as seven-and 14-day reverse repos this week, according to reports. It added a net 59 billion Yuan in the week through November 21, the most since September, after withdrawing money in the previous two weeks according to data reports.

COMMODITIES: WTI’s discount to Brent reached an eight-month high as rising inventories weighed on US futures and limited progress in Iran nuclear negotiations supported the European benchmark. WTI for January delivery slid 60 cents or 0.6 percent, to %94.84 a barrel on the New York Mercantile exchange, after settling yesterday at the highest since October 31.

Indicative Currency Exchange Rates
Bid Offer
EURUSD 1.3540 1.3590
GBPUSD 1.6218 1.6268
USDJPY 101.88 102.28
USDCHF 0.9086 0.9116
GBPEUR 1.1978 1.1988
USDZAR 10.0462 10.1962
USDNGN 158.63 158.93
JPYNGN 1.5570 1.6070
CHFNGN 174.59 178.59
EURNGN 214.79 218.79
GBPNGN 257.27 261.27
ZARNGN 15.79 17.79

Commodities
WTI’s discount to Brent reached an eight-month high as rising inventories weighed on US futures and limited progress in Iran nuclear negotiations supported the European benchmark. WTI for January delivery slid 60 cents or 0.6 percent, to %94.84 a barrel on the New York Mercantile exchange, after settling
yesterday at the highest since October 31.

Interest rates
NIBOR (%) LIBOR (%)

O/N 10.6667 USD 1 month 0.16550
7 Day 11.0417 USD 2 month 0.20615
30 Day 11.7083 USD 3 month 0.2366
60 Day 12.0417 USD 6 month 0.3459
90 Day 12.3333 USD 12 month 0.5741
Y/Y Consumer Inflation October 2013 : 7.8%
FX Reserves: 20 November 2013 (USD bn) 44.809
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
158.85/95 158.50/60 158.63/73 158.93/03

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