Strike Cripples Government Securities
By Olugbuyiro Akinola
The nationwide strike called by Nigerian Labour Congress (NLC) last week to protest the hike in fuel prices paralysed the secondary segment of the government securities' market, as no bills were offered for sale at the Open Market Operation (OMO).
Also, there was no activity at the inter-bank market (where banks borrow from one another to meet their financial obligations), while the Open Buy Back and over night rates fluctuated between 9.5 per cent and 12 per cent.
However, at Wednesday's Primary Market Auction (PMA), an oversubsription of N13.5 billion was recorded in the 182-days bill amounting to a drop in the rates from 16 per cent to 15.75 per cent.
A breakdown of the government securities trading indicates that at the PMA, - a 182 days tenured investment which matures on 13th of April, 2005 all the bills valued at N5 billion offered to the market were purchased at the issue rates of between 15.5000 - 16.0000 per cent and bid rates of between 15.5000-15.7500 per annum.
The total public subscription stood at N18.5 billion, an increase of N13.6 billion or 277 per cent above the N4.9 billion subscribed in the week before. The true yield stood at 17.0884 per cent per annum. Since there was no bill repaid, the net sales (purchase) stood at N5 billion.
At the second section of the Primary Market Auction on Thursday - a 91 days tenured investment which will mature January 13th, 2005, bills worth N60 billion offered to the market were purchased 100 per cent at the issue rates of between 12.6500 - 14.5000 per cent and bid rates of between 12.6500-13.9990 per annum apiece. This represents an increase in the investment in this segment of the market by N10 million or 0.00016 per cent.
The total public subscription subsided by N34.386 billion from N78.577 billion the other week to N44.191 billion. The true yield stood at 15.0431 per cent per annum.
Bills amounting to N24.747 billion were repaid, putting the net sales (purchase) position at N35.253 billion.
The Minimum Rediscount Rate (MRR) that is the nominal anchor of all interest rates in the economy however, remained unchanged at 15.00 per cent.
Meanwhile, the naira remained stable at N132.88 in the Dutch Auction System(DAS), as foreign exchange demand reduced from $238 million last week to $217 million.
Similarly, sales of foreign exchange decreased from $214 million last week to $122.47 million.
There was net outflow of N24.44 billion via the primary and secondary markets.
Liquid is expected to seep into the system by next week and demand is expected to mount on the 182-days bills.
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