Funding Rates Moderated as Banks Slowdown Borrowings

Funding Rates Moderated as Banks Slowdown Borrowings

Funding rates moderated in the money market as deposit money banks slowed down borrowing spree from the Central Bank of Nigeria (CBN) standing lending facility.

Despite the reduced pressures, liquidity levels in the financial system remained constraint in the absence of significant inflows, and Treasury bill auction.

According to market report, the banking system liquidity deficit reduced to N349.20 billion after inflows from government bonds coupon.

While N29.34 billion coupon payment boost liquidity, market analysts said treasury bills auction settlement will put additional pressure on the funding profile.

However, the market is expecting significant inflows from local bills which would mature this week. Banks borrowing from the CBN fell by a ₦179.2 billion ahead of Nigerian Treasury bills maturity inflows.

As a result, funding rates moderated, with the open repo rate (OPR) falling by 125 basis points to 31.25%, and the Overnight (O/N) rate declining by 108 basis points to 31.67%

The market anticipates Coupon inflow of ₦29.58 billion and the NTB PMA sales to influence the market liquidity this week, AIIC Capital Limited said in a note.

Interbank rates (NIBOR) declined across most tenors, except for the overnight rate, which edged up by 0.09% to 32.71%. The Nigerian Treasury Bills (NITTY) curve witnessed yield declines across most maturities.

Cowry Asset Limited stated in an update that nonetheless, activity in the secondary market remained subdued, with the average yield inching down by 1 basis point to 17.71%. NMDPRA Calls for African Oil Pricing Benchmark to Strengthen Market