Repo, Overnight Rates Mixed as Liquidity Drops to N6.6trn
Repo and overnight lending rates diverged as banks’ deposits at the Central Bank’s Standing Deposit Facility fell following the midweek Treasury bills auction.
According to analysts at Meristem Securities Limited, financial system liquidity decreased by 7.23%, dropping from NGN 7.06 trillion to NGN 6.55 trillion.
This decline was largely attributed to a reduction of NGN 271.49 billion in standard deposit facility balances, coupled with a NGN 222.37 billion surplus of sales over repayments in the primary market.
Analysts at Cowry Asset Limited noted that NIBOR exhibited varied performance, with the overnight rate rising by 8 basis points to 22.29%, reflecting reduced liquidity in the system.
Meanwhile, the 1-month tenor increased by 25 basis points, while the 3-month and 6-month maturities declined by 7 basis points and 28 basis points, respectively.
Data from the FMDQ platform revealed that money market financing costs, as measured by the Overnight rate, rose by 15 basis points to 22.30%, whereas the Open Repo rate remained stable at 22.00%.
In the Treasury Bills segment, secondary-market yields rose across all maturities. Specifically, the yields for the 1-month, 3-month, 6-month, and 12-month tenors rose by 11 basis points, 5 basis points, 15 basis points, and 6 basis points, respectively.
Overall, the average yield on Nigerian Treasury bills edged down by 1 basis point to 17.57%, indicating improved investor sentiment and a more favourable environment in the secondary market.
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