CBN buildingThe total federally-collected revenue in the second quarter (Q2) of 2013 stood at N2.371 trillion, the Central Bank of Nigeria (CBN) revealed at the weekend.

The amount, however represented a decline by 2.3, 5.2 and 16.4 per cent below the levels in the preceding quarter, the corresponding quarter of 2012 and the proportionate budget estimate, respectively.

The central bank, which disclosed this in its economic report for the second quarter posted on its website, stated that at N1.814 trillion, gross oil receipts, which constituted 76.5 per cent of the total, declined below the proportionate budget estimate and the level in the preceding quarter by 6.2 and 1.9 per cent, respectively. The development relative to the preceding quarter was attributed to the decline in all the components of oil revenue during the review quarter.

Currency in Circulation

Also, the volume of currency in circulation in the Nigerian economy fell by 5.6 per cent to N1.425 trillion at the end of the Q2. The currency in circulation had earlier declined by 7.6 per cent at the end of the preceding quarter. The CBN attributed the development largely, to the 9.3 per cent decline in currency outside the banks.

According to the report, the total deposits at the CBN amounted to N6.112 trillion at the end of the period under review, indicating a decline of 10.2 per cent, compared with the decline of 8.3 per cent at the end of the preceding quarter.

The development, according to the central bank, also reflected largely, the 24.6 and 21.9 per cent fall in deposits of banks and Federal Government, respectively, adding that of the total deposits, the shares of the federal government, banks and ‘others’ were N3.822 trillion (62.5 per cent), N1.811 trillion (29.6 per cent) and N479.6 billion (21.9 per cent), respectively.

“Reserve money (RM), at N3.236 trillion, fell by 17.3 per cent in contrast to the 5.5 per cent increase recorded in the preceding quarter, but showed a decline of 0.6 per cent below the level in the corresponding period of 2012. The development was attributed to the decline in currency in circulation and DMBs deposit with the CBN,” it added.

Money Market Development

According to CBN, during the review period, money market rates were influenced by the liquidity condition in the banking system, stating that monetary policy stance remained largely restrictive as the Monetary Policy Rate (MPR) was maintained at 12 per cent.
The Liquidity Ratio (LR), Cash Reserve Requirement (CRR) and the Net Open Position were also retained at their previous levels of 30, 12 and one per cent, respectively in the second quarter. But money market indicators were relatively stable in the review quarter.

Furthermore, it showed that on two occasions, the CBN offered special Open Market Operations (OMO) auctions at fixed rates of 12.75 and 12.35 per cent during the quarter.

The central bank’s discount window also remained open to authorised dealers to access both the standing deposit facility (SDF) and standing lending facility (SLF).

Provisional data indicated that the value of money market assets outstanding for the second quarter of 2013 stood at N6.547 trillion, showing an increase of 5.9 per cent, in contrast to the decline of 0.6 per cent at the end of the preceding quarter.

This was largely attributed to the 1.73 per cent in the first quarter of 2013. All other rates on deposits of various maturities, however, fell from a range of 5.05 – 8.39 per cent to a range of 4.71 -7.72 per cent in the second quarter of 2013.

Similarly, at 6.58 per cent, the average term deposit rate fell by 0.6 percentage point below the level in the preceding quarter.
The prime and maximum lending rates also rose by 0.19 and 0.74 per cent points to 16.62 and 24.56 per cent in the second quarter of 2013.

Consequently, the spread between the weighted average term deposit and maximum lending rates widened to 17.98 percent from 16.64 per cent in the preceding quarter.

“The margin between the average savings deposit and the maximum lending rates, also widened by 0.43 per cent point to 22.52 per cent from 22.09 per cent. With the headline inflation rate of 8.4 per cent at end-June 2013, all rates, with the exception of lending rates, were negative in real terms.

“At the interbank funds segment, the weighted average interbank call rate, which stood at 11.35 per cent at the end of the first quarter of 2013, rose to 11.69 per cent in the second quarter of 2013, reflecting the liquidity condition in the banking system.

“Similarly, the weighted average rate at the Open Buy Back (OBB) segment rose marginally to 11.27 per cent at the end of the review quarter from 11.26 per cent in the preceding quarter. The Nigeria Interbank Offered Rate (NIBOR) for the 7-day and 30-day tenors rose to 12.19 and 12.46 per cent from 11.83 and 12.39per cent, respectively, in the preceding quarter,” it added.

Commercial Paper

Also, at the end of the second quarter, the value of Commercial Paper (CP) held by the banks rose by 51.2 per cent to N15 billion, compared with the N9.92 billion at the end of the preceding quarter. The development was attributed to the increase in holding of CPs by the merchant banks during the review period.

Thus, CPs constituted 0.2 per cent of the total value of money market asset outstanding, same as at the end of the preceding quarter.

Weekly Market Review

Meanwhile, at the central bank-regulated Wholesale Dutch Auction System (WDAS) last week, a total of $600 million was offered, while a total of $525.1 million was sold. A breakdown of the amount sold showed that the dealers bought $266.6 million last Monday and $258.5 million at last Wednesday’s auction respectively.

The marginal rate at both auctions remained at N155.76/$1. However, the naira shed 50 kobo at the inter-bank market, to close at N163.60/$1 last Friday, from N163.10/$1 the preceding Friday. The BDC and parallel markets were in line with the trend in the interbank market as both markets also lost N1 to close at N164.50/ $1 and N165/$1 respectively.
However,  at the money market, the call rate rose by 262 basis points while the 180-day rates improved by 216 basis points last week. The Call and 7-day rates both climbed the highest as they closed at 19 per cent and 19.3 per cent respectively.

“We expect NIBOR to restabilise back in the coming weeks. In the treasury bills market, liquidity eased following the maturity and repayment of N97.2bn OMO bills by the CBN,” Afrinvest Securities Limited said in a report.

The CBN mopped up excess liquidity as it sold N84.02 billion in OMO bills.

On the other hand, at the bond market, yields inched lower during the week across most bonds while prices moved higher.
“The 3-year 13.1 FGN APR 2016 bond lost the highest with one per cent to 13.1 per cent. The exception however was the 7-year 9.25 per cent FGN JAN 2014 bond which moved higher by 2.1 per cent to 13.6 per cent. The long end of the yield curve however remained flat while bargain hunters continue to scout the market,” the Afrinvest report added.


The Debt Management Office (DMO) last week said Nigeria was looking for an international bank and a local lender to act as co-arrangers for an N80 billion depository note to be issued this year. The DMO said in a notice it had appointed a sole depository bank and an arranger for the offering, but did not name them.

A source at the debt office told Reuters Nigeria had mandated Citibank to act as the depository bank. Bids for co-arrangers are due on October 3rd. Nigeria also plans to issue $100 million in diaspora bonds this year and is seeking advisers. The DMO said the depository note would be documented under United States rules and listed in Europe.


Information from This Day was used in this report.