A Review of the Nigerian Energy Industry

Financial market update

finance18 December 2013, Sweetcrude, Houston – Local and international financial market products and services update.
NIGERIA: Governor Lamido Sanusi said the Nigerian central bank aims to raise the proportion of Yuan-denominated assets in its forex reserves to 5%, China Business News reported yesterday, citing a recent interview with Sanusi. The central bank has invested in Yuan assets in Hong Kong and bought government bonds and China Development Bank bonds. Nigeria is considering selling dim sum bonds in HK to have stable Yuan cash flows and hedge exchange-rate risks in bilateral trade.

BONDS: Investors are selling riskier assets and moving money into short-term debt due to uncertainty over government spending and the future leadership at the Central Bank of Nigeria along with the FED’s “taper” risk as the last FOMC meeting draws to an end today. We however saw a slight retracement from Monday’s move (21bps hike) yesterday as average bond yields closed at 13.02% (5bps lower than open).

BILLS: Slight reversal in market sentiment yesterday as demand tipped yields a tad lower across the curve, with the exception of the 142d and 156d bills which spiked higher by 25bps on the back of CBN’s offer and sales of the 142d bill in OMO auction yesterday. The overall average yields settled at 12.26% (2bps lower than open).

MONEY MARKET: OBB and ON rates sat at 10.50%.

FX: Naira weakened by 0.9% to 159.15/$ yesterday as news of CBN’s closure for the year pushed parts of the weekly RDAS demand to the interbank market. Given that market was devoid of any major inflow while demand is still sprinkling in, we expect the pair to trade the 159 level this week, but we expect a much tighter range than we’ve seen so far. CBN’s RDAS Closes today and re-opens on the 6th of January, 2014.

US: Economists are divided over whether the Fed will decide today to reduce its $85 billion monthly pace of bond purchases, with some saying that recent economic data is strong enough to warrant a move, and others that policy makers need to see more evidence that growth is durable

EUROPE: EU lawmakers clinch deal on a bill that will force banks to pay into standing funds that would be tapped to protect depositors when lenders fail. German IFO business confidence may rise for 2nd month, a survey shows.

CHINA: China’s Yuan traded 0.02 percent off the strongest level in 20 years as the central bank kept the daily fixing close to an all-time high and on optimism growth in the world’s second-largest economy is picking up. The currency reference rate has been set at 6.1105 per dollar, near the record 6.1100 on Dec. 11.

COMMODITIES: WTI rose after industry data showed U.S. crude inventories shrank for a third week and before the Federal Reserve decides whether to pare back stimulus in the world’s biggest oil consumer. WTI for January delivery, which expires tomorrow, gained as much as 21 cents to $97.43 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.38 at 1:52 p.m. Singapore time.

Indicative Currency Exchange Rates
Bid        Offer

EURUSD       1.3770    1.3820
GBPUSD       1.6284    1.6334
USDJPY        102.94   103.34
USDCHF       0.8851   0.8881
GBPEUR       1.1826    1.1836
USDZAR     10.3070  10.4570
USDNGN     158.46     158.76
JPYNGN      1.5393      1.5893
CHFNGN     179.03     183.03
EURNGN     218.20    222.20
GBPNGN     258.04    262.04
ZARNGN      15.37        17.37

Commodities
WTI rose after industry data showed U.S. crude inventories shrank for a third week and before the Federal Reserve decides whether to pare back stimulus in the world’s biggest oil consumer. WTI for January delivery, which expires tomorrow, gained as much as 21 cents to
$97.43 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.38 at 1:52 p.m. Singapore time.

Interest rates
NIBOR (%)                        LIBOR (%)

O/N              10.8333           USD 1 month          0.1663
7 Day            11.0833           USD 2 month          0.2132
30 Day         11.3333            USD 3 month          0.2443
60 Day         11.5833            USD 6 month         0.3479
90 Day         11.8333            USD 12 month       0.5806
Y/Y Consumer Inflation June 2013 :                7.9%
FX Reserves: 13 December 2013 (USD bn)   44.353
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  159.05/15    158.45/55     159.00/10     158.46/56

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