Monetary Policy Committee, Others Raise Deposit Facility

The meeting of the Monetary Policy Committee (MPC), Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC) and others last week resulted to raising the Standing Deposit Facility (SDF) which previously stood at 3.50 per cent to 4.50 per cent in order to encourage the flow of funds to the apex bank’s deposit.

However, despite the seemingly attractive deposit rate, funds that were channelled into the Over-the-Counter (OTC) Bond Market last week more than doubled, an indication that the fields on bonds are far more attractive than what the MPC is offering.

Statistics made available showed that at the OTC bond market, a turn over of 210.84 million units worth N174.22 billion in 1,445 deals was recorded this week, as against the 88.7 million units valued at N74.68 billion exchanged in 700 deals during the week ended Thursday.

The most active bond (measured by turn over volume) was the 10,000 percent FGN July 2030 (7th FGN bond 2030 series 3), with a traded volume of 78.4 million units valued N59.515 billion in 561 deals..

This was followed by 4.00 per cent FGN April 2015 (7th FGN \bond 2015 series 2) with a traded volume of 58.3 million units, valued a t N44.03 billion in 446 deals. 17 of the available 35 FGN Bonds were traded during the week, compared to nine in the proceeding week.

Reacting to the situation, a Lagos-based fund manager, John Okolo said “whether the funds went into bonds or CBN’s fault, the important thing is that careless money in the system is being mopped up one way or the other.

He stated that investors affinity for bonds from oil-rich nations does not seem to have diminished and the same is expected for the country.

Okolo further opened that the bond was unlikely to be hinder subscribed following the S & P’s affirmation and the important factor also is that Nigeria has oil in abundance” he stated.