CBN Governor, Sanusi Lamido Sanusi
The total amount of subscription for treasury bills increased significantly to N889.95 billion in September, compared with the N466.95 billion recorded in August, the Financial Market Dealers Association (FMDA) has said.
The FMDA stated this in its monthly economic and financial report for September, obtained by THISDAY Tuesday.
But CBN allotted N348.90 billion against N222.70 billion bills in August 2012.
According to the report, the rate of return in the Primary Market Auction (PMA) fell marginally in the month under review when compared with the average rate of the previous month in sharp response to changes in inflation rate.
It said: “At the first, second, and third auction in the month under review, 91 days stop rates averaged 12.78 per cent against 14.25 per cent last month; 182 days averaged 13.13 per cent relative to 15.19 per cent in August, while 364 days bills which was only traded in two auctions averaged 13.46 per cent when juxtaposed with 15.38 per cent of the preceding month.
“Available data revealed that series of sub-91 days Open Market Operation (OMO) auction session was conducted in the month to mop-up excess liquidity created by maturing bills and FAAC fund release. Hence, the CBN offered N820 billion and sold N204.86 billion.”
It attributed the relatively low OMO sales recorded to investors’ desire for attractive interest rate based on inflationary expectation and substantial injection into the market from some of the sources mentioned earlier.
It further showed that deposit taking and lending rate of deposit money banks (DMBs) in the month under review were relatively stable.
According to FMDA, savings rate averaged 2.0408 per cent; while other tenured funds ranged between 3.9917 per cent and - 9.0469 per cent for overnight to 364 days money.
“For the lending rates, prime structured loan stood at monthly average of 18.08156 per cent same as August rate; similarly, the normal structured loan stood at 22.1563 per cent.
“The spread between the deposit and lending rates widened moderately in the preceding month following the increase in the CRR by 400bps in August,” it revealed.
The report also showed that the federal government, through its debt market, raised N60 billion relative to N75 billion borrowed the preceding month. This reflected a decrease of 25 per cent.
“Total public subscription for the two bonds amounted to N82.97 billion against N115.08 billion last month. The successful bids that ranged between 14.98 per cent - 18.2500 per cent for the instruments were allotted at the stop rates of 12.9330 per cent and 12.9000 per cent for 15.10 per cent FGN APR 2017 and 16 per cent FGN JUNE 2019 respectively,” it added.