Rates Shift as Banks’ Placements at CBN Window Declines
Amidst a slowdown in banks’ placement, Nigerian interbank rates showed mixed movements on Wednesday, with overnight rates falling 0.2% to 24.83% due to enhanced system liquidity exceeding ₦1.6 trillion.
The financial system liquidity was spurred by ₦300 billion in OMO bill maturities on Tuesday. The funding system fluctuated, closing lower from more than N2 trillion surplus on record.
Banks continue to deposit funds with the CentralBbank, aiming at earning a standard deposit rate of 24.5% versus a lower yield on Nigerian Treasury bills.
Despite improved macroeconomic data, commercial banks’ lending appetite has reduced amidst growing default and the authority move to end forbearance and tighten the single obligor limit.
Market analysts noted, however, the commercial banks’ placement at the standing deposit facility was reduced, and some cash-tight lenders were noted to pay a visit to the standing lending facility to access funds.
DMBs placements at the CBN’s SDF window fell to ₦1.4 trillion, despite a ₦194.3 million bond coupon inflow, AIICO Capital Limited hinted in a note.
The overnight rate climbed 3 bps to 24.90%, while the open purchase rate remained at 24.85%. Market analysts anticipate funding costs to remain at a similar level, barring any funding activity.
Elsewhere, the Treasury Bills secondary market exhibited divergent trends on Wednesday, with short- to medium-term 1-month, 3-month, and 6-month yields dropping 1 bp, 4 bps, and 6 bps, respectively, while the longer-term 12-month rate advanced 10 bps.
Despite these varied movements, the average Nigerian Treasury Bills yield declined 1 bp to 17.37%, reflecting sustained bullish sentiment and strong investor demand in the secondary market. #Rates Shift as Banks’ Placements at CBN Window Declines Nigeria Bonds Yield Sinks to 16% on Broad-Based Demand
