Interbank Rates Drop amidst Rising System Liquidity

Interbank Rates Drop amidst Rising System Liquidity

Interbank funding rates dropped further yesterday, as financial system liquidity opened higher at N281 billion from N255 billion in the previous session.

The Open Buy Back (OBB) and Overnight (OVN) rates declined by 1.08% and 1.05% to 4.67% and 5.33% respectively.Interbank Rates Drop amidst Rising System Liquidity

Meanwhile, a sizeable open market operation (OMO) maturity worth N321.48 billion is expected to hit the system Thursday, which should help keep funding pressures benign.

Read Also: Interbank Rates Decline to Single Digit as Liquidity Improves

Chapel Hill Denham analysts however said sentiments improved slightly in the fixed income market, perhaps bolstered by high liquidity in the financial system.

At the front end of the curve, discount rates on benchmark Nigerian Treasury Bills (NTBs) were broadly unchanged at an average of 2.30%.

However, bullish sentiments persisted in the OMO segment, as rates fell further by 11 basis points bps to 2.97%.

Chapel Hill’s analysts stated that short (-13bpd to 2.53%) and mid (-14bps to 2.97%) day to maturity (DTMs) were the key drivers, while long DTMs were un-changed at an average of 3.19%.

In the bond market, there were pockets of interests in some intermediate and long maturities, while the short end of the curve repriced higher by 4bps to 5.80%.

Against this backdrop, average yield on the benchmark bond yield curve was flat at 7.97%.

“With the sizeable OMO maturity expected tomorrow, the CBN is expected to float an OMO auction, to partly rollover maturing bills of foreign portfolio investors”, Chapel Hill stated.

Interbank Rates Drop amidst Rising System Liquidity

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