GOVT SECURITIES RECORD 218% OVER-SUBSCRIPTION

By Babajide Komolafe
Demand for government securities exceeded supply by 218 per cent with investors demanding for higher interest rate. Last week,  Central Bank of Nigeria (CBN) offered N149.650 billion worth of three variant of fresh securities (primary market bills).

Investors however demanded for N476.86 billion worth of bills. But the apex bank sold only N149.650 billion due to demand for higher interest rate by investors.

Investors demanded for rates as high as 19 per cent while the highest rate offered by the apex bank was 15.55 per cent.

Further analysis showed that for the 91 Days bills, total public  subscription was N59.33 billion, while  the CBN offered N49.65 billion and sold N44.650. Interest rate demanded by investors ranged from 14 to 16.44 per cent, while the CBN offered 14.8 per cent.

For the 182 days bills, total public subscription was N157.160 billion while the CBN offered N50 billion and sold N20 billion. Investors demanded for interest rates ranging from 15 to 17.32 per cent while the apex bank offered 15.5 per cent.

The 364 days bills, recorded the highest total public subscription of N260.370 billion. The CBN offered N50 billion and sold N85 billion. Interest rates demanded by investors ranged from 14.5 to 19 per cent while the apex bank offered 15.55 per cent. On the other hand the apex bank repaid N149.650 billion worth of bills that matured last week.

This notwithstanding, the interbank money market experienced scarcity of funds (liquidity), with net amount of funds in the market dropping N34.467 billion to minus N9.647 billion. Analysis of market liquidity indicated that some banks had idle funds of N74.419 billion while some deposited N24.1 billion with the CBN.

However, some banks borrowed N108.166 billion from the apex bank to mitigate shot-fall in their liquidity position. The decline in market liquidity expectedly pushed up cost of funds, as interbank interest rates rose slightly during the week.

Interest rate on Call, 7-Days and 30-Days lending rose to 15.54,  16.00 and  16.57 per cent from 15.35,  15.71 and  16.12 per cent respectively.