Repo, Overnight Rates Stead as Banks Increase SDF Placement
Repo and overnight lending rates held steadied as deposit money banks (DMBs) increased their placement at the Central Bank of Nigeria (CBN) Standing Deposit Facility (SDF).
After weighing their investment options amidst efforts to boost earnings, banks have accepted 22.50% SDF rate a better alternative compared with other money market instruments.
The move has been supported by excess liquidity level in the financial system despite series of open market operations action and treasury bills sales.
System liquidity expanded by +4.42% to N3.17 trillion on Thursday from N3.04 trillion in the previous session, according to separate investment banking firms.
This happened following an increase of N43.38 billion in the standing deposit facility, and a N96.26 billion net treasury bills inflow which is difference between primary market repayment and sales.
Banks placement at the CBN increased to N2.90 trillion following recent addition while activities at the standing lending facility remained minimal.
Still, the interbank rates remain unchanged with the Overnight rate steady at 22.75% and the Open Repo rate also stable at 22.50%.
Nigerian Interbank Offered Rates continued their downward trend for the second straight day on Thursday, with the overnight rate dropping 2bps to 22.76% in the absence of significant pressures.
Money market financing costs remained stable, with both the Overnight rate holding at 22.75% and the Open Repo Rate unchanged at 22.50%.
The Treasury Bills secondary market saw yields rise across all maturities, as the 1-month, 3-month, 6-month, and 12-month tenors increased by 4bps, 49bps, 45bps, and 177bps respectively/
The overall Treasury Bills average yield climbed to 16.95%, following the introduction of a new 364-day maturity. Fund cost is expected to remain at similar level, barring any funding activities or CBN action on Friday.
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