By MICHAEL EBOH & ELIZABETH AMIHOR

The value of money market assets in the Nigerian financial system dipped by N288 billion in three months — between April and June 2012, according to the Central Bank of Nigeria’s economic report for the second quarter of 2012.

Money market assets’ value which opened the second quarter at N5.534 trillion depreciated by 5.2 per cent to close the quarter at N5.246 trillion.

The decline, according to the report, is as a result of significant decline in the value of Federal Government of Nigeria, FGN, Bonds, Treasury Bills, Bankers’ Acceptances, BAs, and Commercial Papers, CPs, owing to reclassification of some items.

In particular, the value of Bankers Acceptances held by banks dropped by 29.01 per cent to N20.2 billion at the end of the second quarter, compared with the decline of 61.3 per cent at the end of the first quarter.

Value of Commercial Papers held by banks depreciated 98.9 per cent to N2.0 billion at the end of the second quarter of 2012, compared with the decline of 3.5 per cent at the end of the preceding quarter.

According to the report, the development reflected the decline in investments by deposit money banks and discount houses, especially BAs accounted for 0.4 per cent of the total value of money market assets outstanding at the end of the review quarter, compared with 0.5 per cent at the end of the preceding quarter.

The CBN disclosed that Open Market Operation, OMO, remained the major instrument of liquidity management in the second quarter of 2012, complemented with interventions in the foreign exchange market.

According to CBN’s report, while the open market experienced a fall the inter-bank market rate maintained an upward trend for most part of the second quarter in response to liquidity condition. The CBN said, “The weighted average interbank call rate increased by 0.14 percent point to 14.34 percent at the end of Q2 compared to the 14.20 percent which stood at Q1 of 2012.

Federal government Bonds and Nigerian Treasury Bills (NTBs) were issued at the primary market for the fiscal operations of the Federal Government.”

The apex bank further noted that FGN Bonds of three, five, seven and 10-year tranches were auctioned during the review period, noting that of the four tranches, two (three-year and 10- year) were re-openings while the other two (5-year and seven- year) were new issues.

It said, “The total amount offered, subscribed to and allotted were N243.91 billion, N468.22 billion and N243.91 billion respectively, with marginal rates between 14.95 – 16.24 per cent.  N20 billion and N28.7 billion of the 7- and 10–year tranches were also sold to non-competitive bids in the month of June.

“Bills of maturities ranging from 41 to 357 days were also traded in Q2of 2012 to mop up excess liquidity in the system.  The total sale in the review period was N681.43 billion, while subscription was N1, 978.10 billion.

“The bid rates ranged from 12 to 18.5 per cent, while the stop rates ranged from14 to 15.56 per cent. The total sales were 52.02 per cent below the level in the previous quarter.

“The report affirmed that the weighted average rate at the Open Buy Back (OBB) segment increased to 13.99 per cent at the end of the review quarter from 13.70 per cent in the preceding quarter. The Nigeria Interbank Offered Rate (NIBOR) for the 7- and 30-day tenors also rose to 14.90 and 15.33 per cent, respectively, from 14.60 and 15.20 per cent in first quarter of 2012.