N181.2m subscription for 25th stock

The N180 million 25th Development Loan Stock recorded a marginal over-subscription of N1.2 million as records showed yesterday, when the last batch of returns were made to Central Bank of Nigeria, CBN.
Workers of CBN worked for longer hours yesterday as they battled to meet up with Finance Ministry’s pressure of the bank to furnish it with details of returns.
Central Bank sources said that allotment would begin as soon as the bank clears with the finance ministry.
It is not clear whether the finance ministry would ask for a supplementary offer as it had done for the 23rd and 24th Development stocks, particularly as the over-subscription is very marginal. Finance Ministry sources could not say what the position would be before going to press.
Unofficial opinion at the ministry is divided on the issues. Some are of the view that with the rate of money supply surpassing budget targets, supplementary offers may not be necessary, while others consider the margin of over-subscription too narrow to be inflationary.
Meanwhile, CBN sources said that allotment would be done solely by the apex bank and would not involve any of the quarterly government brokers. This is obviously to guard against possible accusations of favouritism for own clients which was levelled against government brokers in 1985 when allotment was being done for supplementary offer for the 23rd stock.
Meanwhile, the proceeds of the 25th Loan Stock will be advanced to states for he purpose of boosting agriculture. The stock which is denominated at N20 per unit was floated in the wake of the slump in the capital market following the interest rate deregulation of August this year.
This was a departure from the government’s initial stand in the 1987 budget which suspended the 25th stock this year.
However, with the deregulation, there was panic among investors who rushed to the stock market to off-load their government stock holdings whose coupon rates were considered no longer marketable as a result of the deregulation.
The federal government then suspended trading and reduced the face value of government stocks to discourage bulk off-loading. But the slump that followed then called for reflation of the market through new issues.
Meanwhile, observers are of the view that th performance of the 245th stock is an indication of the illiquid nature of the Nigerian economy. The low response of investors (compared with the previous stocks) also suggested a gradual investors’ apathy towards the capital market due to attractive interest rates in the money market.
Both the 24th and 23rd Stock had been subscribed by over 200 per cent, with the federal government asking, in each case, for a supplementary offer of 100 per cent.
The 24th stock for instance whose value initially stood at N300 million was subscribed to the tune of N824 million. The federal government, following this, had propped up the value of N600 million.