A Review of the Nigerian Energy Industry

Financial market update

finance16 December 2013, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Nigeria inflation rate rose to 7.9% Y/Y in November from 7.8% in October, Country’s National bureau of Statistics say. Central bank inflation range of 6% to 9% in 2014 according to Deputy Governor Kingsley Moghalu

BONDS: For maturities with 1.36-16.62YTM, the average yield rose by 8bps to 12.87%. The DMO sold N35billion worth of 3yr bonds with a coupon of 13.05% and post-auction yield of 12.55% and N30billion worth of 20yr bonds with a coupon of 10% and a post-auction yield of 12.99%.

BILLS: Trading in the T-Bill market was bearish last week as the average yield rose by 20bps to 12.20%. At the conclusion of the OMO auction (12 December), the true yield of the 105-days and 133-days instrument stood at 12.36% and 12.55% while the 105-days and 133-days T-Bill maturities closed trading with yields of 12.54% and 12.65% respectively.

MONEY MARKET: The average inter-bank rate trended higher throughout the week as a combination of bonds sales worth N60billion coupled with OMO issues worth N27.61billion drained liquidity from the system. Interestingly, an OMO maturity worth N158billion was unable to pressure the average rate lower and this may be due to increased liquidity needs of banks to sure up their balance sheet as they prepare their Q4 2013 results.

US: The Fed has said it will keep buying assets “until the outlook for the labour market has improved substantially,” so the payroll data, along with the retail sales numbers, have bolstered speculation Bernanke will announce a reduction in quantitative easing at this week’s FOMC meeting on Dec. 17-18.

EUROPE: Poland’s economic revival is boosting tax receipts, reducing the budget deficit faster than government forecasts and putting the nation on course toward meeting European Union fiscal targets. This year’s budget gap will be as much as 9 billion zloty ($3 billion) below target, Ludwik Kotecki, chief economist at the Finance Ministry, said last week. With tax inflows curbing the need to borrow on financial markets, the extra yield on Poland’s 10-year bonds over German bunds has narrowed 20 basis points this month, on course for the steepest drop since July.

CHINA: China’s benchmark money-market rate rose from near a one-month low on increased demand for cash as the end of the year approaches. The People’s Bank of China gauged demand today for sales of seven- and 14-day reverse repurchase contracts and also asked lenders to submit orders for 28-day repurchase contracts. New Yuan loans and aggregate financing rose by more than expected in November, official data showed last week. Funding costs may climb following market reforms that include the first sales of negotiable certificates of deposit, according to sources.

COMMODITIES:
WTI crude dropped to the lowest level in 10 days as falling demand boosted fuel inventories and on concern that the Federal Reserve will curb stimulus. WTI for January delivery declined 90 cents, or 0.9 percent, to $96.60 a barrel on the New York Mercantile Exchange.

Indicative Currency Exchange Rates
Bid       Offer

EURUSD      1.3756      1.3806
GBPUSD      1.6306      1.6356
USDJPY       102.80      103.20
USDCHF      0.8800    0.8830
GBPEUR       1.1854     1.1864
USDZAR     10.2954  10.4454
USDNGN     158.82     159.12
JPYNGN       1.5449     1.5949
CHFNGN     180.48     184.48
EURNGN    218.47      222.47
GBPNGN    258.97      262.97
ZARNGN      15.43       17.43

Commodities
WTI crude dropped to the lowest level in 10 days as falling demand boosted fuel inventories and on concern that the Federal Reserve will curb stimulus. WTI for January delivery declined 90 cents, or 0.9 percent, to $96.60 a barrel on the New York Mercantile Exchange

Interest rates
NIBOR (%)                   LIBOR (%)

O/N             12.3750        USD 1 month       0.1640
7 Day           12.8333        USD 2 month      0.2137
30 Day        13.2083        USD 3 month      0.2438
60 Day        13.4583        USD 6 month      0.3454
90 Day        13.7083        USD 12 month    0.5806
Y/Y Consumer Inflation June 2013 :            7.8%
FX Reserves: 11 December 2013 (USD bn) 44.621
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
    158.90/00    158.40/50   158.82/92   158.40/50

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