Nigerian Overnight Financing Rate Steady on Liquidity Surplus
The liquidity surplus in the financial system has kept the Nigerian Overnight Financing Rate (NOFR) stable, as banks continue to make strong placements at the Central Bank.
At the beginning of the week, money market benchmarks showed little change due to the absence of significant funding pressures.
In its market update, AIICO Capital Limited reported that liquidity in the financial system opened the week with a surplus of ₦4.52 trillion.
The significant amount reflects an increase of ₦553.15 billion from the previous week’s balance, before the Debt Management Office bond auction, during which ₦700 billion in debt instruments were offered across three tenors.
Market analysts expressed that the liquidity surge was fueled by ₦260 billion in coupon inflows from the maturities of the 26-APR-2029 and 27-APR-2032 FGN bonds.
Intermarket liquidity remained solid as banks continued to deposit excess funds at the Central Bank’s Standing Deposit Facility, with ₦4.20 trillion locked down at the window.
The robust placements indicate a restrained appetite for lending amidst rising defaults.
The average funding cost remained unchanged at 22.10%, according to AIICO Capital. The NOFR held steady at 22.00%, while the Overnight Rate (OVN) also maintained its previous close of 22.20%.
The market expects liquidity to remain robust over the coming days, driven by anticipated Open Market Operation (OMO) maturities of ₦716 billion, which should be slightly offset by ₦276.79 billion in FGN Bond auction settlements.
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