By Dipo Olowookere
Analysts at Cowry Asset have predicted that the cost of funds at the interbank is expected to be moderated by the N364.33 billion worth of treasury bills maturing this week via secondary market.
Last week, NIBOR for overnight funds rate moderated to 8.25 percent from 8.90 percent amid sustained financial liquidity ease.
However, NIBOR for other tenor buckets rose: 1 month, 3 months and 6 months tenor buckets rose w-o-w to, 12.06 percent from 11.31 percent, 12.70 percent from 12.44 percent and 14.52 percent from 13.80 percent respectively; suggesting unwillingness of banks to lend to one another.
“This week, T-bills worth N364.33 billion will mature via the secondary market; hence, we expect renewed ease in the financial system liquidity with resultant moderation in interbank rates,” Cowry Asset said.
Also giving a forecast for the week, analysts at Cordros Research said, “[Treasury bills] yields are expected to fall in the meantime, supported by expected buoyant system liquidity.”
But for the money market, they opined that, “Current buoyant liquidity [are expected] to be sustained in the three-sessions of trading this week (due to public holidays on Tuesday and Wednesday), supported by maturing OMO bills, valued at NGN364.33 billion, and bond coupon payments worth NGN15.03 billion. In effect, a contraction in the overnight lending rate is likely.”
During trading last week, the Central Bank of Nigeria (CBN) auctioned treasury bills worth N33.38 billion at both the primary market. The stop rates for the auctioned T-bills moved in different directions across the tenor buckets: 91-day stop rate was flattish at 10 percent while 182-day stop rate rose to 10.50 percent from 10.40 percent; however, 364-day stop rates fell to 11.22 percent from 11.30 percent.
Also, N153.54 billion worth of T-bills were sold via the secondary market. The outflows were
offset by N473.40 billion in matured T-bills.
Also, indicative of liquidity surplus was the Standing Deposit Facility (SDF) worth N431.43 billion which outweighed the Standing Lending Facility (SLF) worth N8.67 billion. Hence, NIBOR for overnight funds rate moderated to 8.25 percent from 8.90 percent amid sustained financial liquidity ease.
Elsewhere, NITTY rose for most maturities tracked amid sustained bearish activity due to the continued sell-offs by foreign portfolio investors: yields on the 1 month, 6 months and 12 months maturities increased to 10.34 percent from 10.24 percent, 13.01 percent from 12.77 percent and 12.86 percent from 12.76 percent respectively; however, yield on 3 months maturity fell to 11.35 percent from 11.36 percent.
