Excess Liquidity Keeps Rates Steady, Banks’ Placements Surge
In the money market, funding rates closed steady as market liquidity remained in excess despite outflow for Nigerian bonds settlement on Wednesday.
The financial system recorded a ₦583.52 billion bond auction settlement, which exerted mild pressure on system balances.
The market liquidity opened the day with a surplus balance of ₦2.3 trillion, representing a marginal increase of ₦30.6 billion from the previous level, AIICO Capital said in a note.
This improvement followed a rise in Deposit Money Banks’ (DMBs) placements at the Central Bank of Nigeria (CBN) Standard Deposit Facility (SDF) window.
Banks placement at SDF window increased by 150% to ₦2.64 trillion, TrustBanc Financial Group Limited said in an update at the close of business on Wednesday.
Investment experts at AIICO Capital said this occurred despite the Monetary Policy Committee’s (MPC) recent adjustment of the Standard Facility Corridor (SFC) to +50/-450 bps from +250/-250 bps at the last meeting.
Money market direction was influenced by enhanced system liquidity stemming from the CBN’s asymmetric corridor adjustment and the previous day’s ₦360 billion OMO bill maturities.
Market reports showed that the average funding rate remained flat as the Open Repo Rate (OPR) and the Overnight (O/N) steady at 22.50% and 22.75%, respectively. Funding rates are expected to be around the similar level barring any fund activities.
In the Treasury Bills secondary market, yields compressed across all tenors, with 1-month, 3-month, 6-month, and 12-month rates falling 2 bps, 10 bps, 11 bps, and 1 bp, respectively. Despite these declines, the composite NT-Bills average yield remained flat at 16.85%, reflecting measured investor appetite and cautious sentiment in the fixed-income market.Guinness Nigeria: Analysts See Upside Potential, Differ on TP
