Rates Steady as Coupon Credit Eased OMO Pressure on Liquidity
Excess liquidity in the financial system kept the short-term benchmark interest rates steady despite open market operations (OMO) conducted by the Central Bank of Nigeria (CBN) on Thursday.
The liquidity balance in the banking system closed at N390.89 billion, falling by N624.68 billion on the day after CBN activity. The CBN offered ₦600 billion in short-dated OMO bills to curb excess liquidity.
Total subscriptions reached ₦1,015.19 billion, with ₦897.19 billion allotted to foreign portfolio investors and local banks. Money market rates initially spiked to 32.5% due to auction funding pressure, AIICO Capital Limited said in a note, but eased after a ₦392.74 billion FGN bond coupon credit.
The interbank rates rose across all maturities, with the overnight rate rising by 1.03% and the 1-month, 3-month, and 6-month rates increasing by 1.30%, 1.43%, and 1.21%, respectively. This uptrend comes from increased activities of banks in the CBN’s Standing Deposit Facility (SDF) amid improved system liquidity. However, money market rates remained flat, with the open repo rate (OPR) and overnight lending rate closing at 26.50% and 27.00%.
Analysts said rates should hold near current levels tomorrow unless a major shock occurs. The Nigerian Interbank Treasury Bills True Yield closed in the mix on Thursday, with yields on the 1-month, 3-month, and 6-month falling by 19 bps, 32 bps, and 9 bps, respectively, while the 12-month tenor saw an increase of 63 bps to close at 20.35%, according to Cowry Asset Limited.
Similarly, the average yield for NT-Bills dipped slightly by 1 bps to 18.07%, reflecting heightened investor interest in the secondary market. #Rates Steady as Coupon Credit Eased OMO Pressure on Liquidity Nigeria’s Borrowing Cost Eased as African Eurobonds Rally
