A Review of the Nigerian Energy Industry

Financial market update

finance27 November 2013, Sweetcrude, Houston –Local and international financial markets products and services update.
NIGERIA: Nigeria’s central bank will retain its 6 percent to 9 percent target range for inflation next year, in line with its price-stability mandate, Deputy Governor Kingsley Moghalu said. “We’re very mindful of stability as a basic requirement for growth,” Moghalu said in an interview in Johannesburg. “Nigeria’s economy is growing at around 7 percent, so I don’t think that our monetary policy is hindering that growth.” The Central Bank of Nigeria has maintained the benchmark rate at a record 12 percent since October 2011 to help stabilize the naira and keep inflation under control. Consumer prices rose at the slowest pace in more than five years in October, gaining 7.8 percent from a year ago.

BONDS: Yields rose across the entire maturity spectrum we follow, pushing average bond yield higher by 7bps to 12.80%. The greatest yield increase of 15bps occurred on the April 2017s where price declined by N0.42k.

BILLS: The average T-Bill yield rose by 15bps to 11.77%. The bearish move was driven by the OMO auction offered by the CBN at very attractive rates. The CBN offered N20bn on 65D and N30bn on 72days but sold N18.45bn of 65D at 11.55% discount and N16.80billion of 72D at 11.65% discount. The OMO cut-off rate drove the yields on these two maturities in the secondary market higher as the 65D and 72D T-Bills traded higher by 71bps and 92bps respectively. Also maturities between 37D – 107D saw increase in yields pushing the overall average bill yield higher.

MONEY MARKET: OBB and ON rates remained unchanged at 10.50%. Money market liquidity opened higher at around N385billion.

US: The pace of US house price rises slowed in September, as higher mortgage rates and concern about a government shutdown weighed on the market. The closely-watched S&P/Case Shiller Index saw a 0.7% price rise, against a 1.3% gain from July-to-August. Case Shiller measures single-family home prices in 20 cities. Rises slowed in 19 cities, while one saw a fall. Despite the slowdown, prices are still 13.3% up on September 2012, the fastest gain for more than seven years.

EUROPE: The European Central Bank is technically ready to make banks pay for the funds they deposit overnight at the central bank but negative interest rates are only one of the tools in its armoury, Executive Board member Benoit Coeure said on Tuesday. Coeure also said that he did not see a very likely prospect that disinaltion would deepen in the euro zone as growth recovers.

CHINA: China’s benchmark money-market rate fell for a fourth day on speculation the central bank will increase cash injections into the financial system. The People’s Bank of China asked lenders today to submit bids for offerings of 14-day reverse-repurchase agreements, 28- day repos and 91-day bills tomorrow, according to a trader at a primary dealer required to bid at the auctions. The PBOC added 32 billion yuan ($5.3 billion) yesterday via seven-day reverse- repo contracts. It resumed 14-day reverse-repo operations on Nov. 21 after a two-week halt.

COMMODITIES:
WTI fell for a fourth day after industry data showed crude stockpiles rose for a ninth week in the U.S., the world’s biggest oil consumer. WTI for January delivery dropped as much as 32 cents to $93.36 a barrel in electronic trading on the New York Mercantile Exchange, and was at $93.43.

Indicative Currency Exchange Rates
Bid          Offer

EURUSD           1.3579        1.3629
GBPUSD           1.6216        1.6266
USDJPY            101.53        101.93
USDCHF          0.9065       0.9095
GBPEUR           1.1942        1.1952
USDZAR          10.0890    10.2390
USDNGN          158.51        158.96
JPYNGN           1.5612         1.6112
CHFNGN          174.86        178.86
EURNGN          215.24        219.24
GBPNGN          257.04        261.04
ZARNGN           15.71           17.71

Commodities
WTI fell for a fourth day after industry data showed crude stockpiles rose for a ninth week in the U.S., the world’s biggest oil consumer. WTI for January delivery dropped as much as 32 cents to $93.36 a barrel in electronic trading on the New York Mercantile Exchange, and was at $93.43.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              10.5833      USD 1 month         0.1640
7 Day            10.9583      USD 2 month        0.2050
30 Day         11.5833       USD 3 month        0.2366
60 Day         11.9583       USD 6 month        0.3441
90 Day         12.2917       USD 12 month      0.5756
Y/Y Consumer Inflation October 2013 :            7.8%
FX Reserves: 21 November 2013 (USD bn)    44.774
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
   158.68/78   158.58/68     158.61/71     158.65/75

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