THE inter bank money market last week witnessed an unprecedented scramble for treasury bills even as the Central Bank of Nigeria rolled out a deluge of bills to mop up N408 billion from the market.

The scramble for treasury bills or government securities was occasioned by the extreme excess liquidity in the inter bank money market. The liquidity was precipitated by the influx of N600 billion excess crude funds released the previous week. Cost of funds in the market responded promptly to the influx falling on the average a little more than half.

For example interest rate on collateralize lending also known as Open buy back (OBB) fell by 60 per cent to 6.25 per cent from 10.25 per cent at the close of business on Friday, while interest rate on Call and Seven days lending also fell by 57 per cent and 25 per cent respectively. From 11.58 at the close of business on Friday interest rate for Call lending fell to 7.5 per cent, while interest rate on Seven days lending fell from 12.75 per cent to 10.2 per cent.

In view of the paucity of investment funds in the market, the excess liquidity led to a scramble for treasury bills whilst the CBN also in a bid to address the abnormal liquidity situation rolled out 16 open market operations bills, four reverse repo bills and three primary market bills.

The scramble for treasury bills was most evident in the one year primary market treasury bills, which recorded 446.3 per cent over subscription. Though the CBN offered N10 billion worth of bills public subscription stood at N54.630 billion. This compelled the apex bank to increase the amount offered to N48.03 billion.

At the secondary market also referred to as open market operation (OMO) , where existing bills are sold the CBN sold N168 worth of bills with tenors ranging from 78 days to 310 days. The issue rate ranged from 9.2 to 9.55 per cent. On the other hand the apex bank repaid N90 worth of maturing bills.

At the primary market where new bills are issued, in addition to the one year bills, the apex bank floated N5 billion and N35 billion worth of 91 days and 182 days bills while total subscription to at N11.12 billion and N75.39 billion respectively, indicating more than 200 per subscription for both bills.

The issue rate for the 182 days bills increased slightly from 9.54per cent to 9.55 per cent while the issue rate for the 91 days bills decreased slightly from 9.25per cent to 9.24 per cent. On the other hand the apex bank repaid N5 billion and N10 billion worth of maturing 91 days and 182 days bills respectively.

In addition to the above, and to effectively purge the market of the extreme liquidity, the CBN sold N246.2 billion worth seven days tenured reverse repo bills at 5.9558 per cent.