Market Wrap: Inter-bank rates shaded at Low Single Digits

Market Wrap: Inter-bank rates shaded at Low Single Digits

Interbank funding rates remained subdued at low single digits today, as financial system liquidity opened higher at ₦746 billion from ₦604 billion yesterday.

However, the Open Buy Back (OBB) and Overnight (OVN) rates increased marginally by 21 bps and 13 basis points (bps) to 1.33% and 2.00%, respectively.

Meanwhile, analysts at Chapel Hill Denham, a leading investment firm in Lagos said the fixed income market traded on a calm note today.

At the front end of the curve, analysts said benchmark Nigerian Treasury Bills and open market operations (OMO) rates were unchanged at an average of 2.07% and 4.14%, respectively.

However, in the bond market, sentiments were slightly bullish, as average yield on benchmark bonds compressed by 6bps to 6.54%, analysts stated.

Chapel Hill Denham explained that this was mainly driven by increased positioning at the short end of curve which dropped 24 bps to 3.75%.

This offset a pullback at the long end of the curve, up +2 bps to 8.83%, while intermediate bonds closed flat at 6.24%.Market Wrap: Inter-bank rates shaded at Low Single Digits

A rollover NTB auction is scheduled to hold Wednesday, with the Debt Management Office set to offer ₦269.95 billion across three tenors.

The rollover on the tenors include ₦49.84 billion of 91-day, ₦54.59 billion of 182-day, and ₦161.52 billion of 364-day papers.

Meanwhile, the previous auction cleared at 1.30%, 1.80% and 3.35% respectively.

“Given the robust level of liquidity in the financial system, we expect the auction to clear at lower stop rates”, Chapel Hill Denham noted.

Read Also: No Swing: Why MPC Maintains Status Quo, Hold Key Rates

Also, the Naira rate weakened by 0.06% or 25 kobo to ₦389.50 at the I&E Window, while parallel market rate closed flat at ₦475.

The official and SMIS rates were unchanged at ₦381 and ₦380.69 respectively, based on data from the FMDQ, although the CBN quoted the official rate at ₦360 on its website.

Market Wrap: Inter-bank rates shaded at Low Single Digits

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