By Dipo Olowookere
The treasury bills market closed bullish on Monday as investors look forward to a booming fixed income market segment this week.
At the close of business yesterday, the average yields in the T-bills market reduced further by 0.30 percent to settle at 12.17 percent.
This was as market players looked to the secondary market to invest maturities and excess liquidity positions.
According to analysts at Zedcrest Research, this came on the back of the absence of an Open Market Operations (OMO) auction by the Central Bank of Nigeria (CBN) in the previous week and inflows from FAAC payments into the system today.
In line with expectations, market players remained constrained to the shorter end of the curve, with very little trading activities observed beyond the Dec 2018 maturities.
It was disclosed that the decision by the apex bank to allow for surplus liquidity in the system, in a way, signals its intentions to keep short term rates stable.
Consequently, the T-bill rates are to remain relatively stable in the near term barring a change to the CBN’s liquidity management approach.
Meanwhile, the average money market rate went down to 4.92 percent at the close of yesterday’s transactions, Business Post reports.
While the Open Buy Back (OBB) rate reduced by 1.58 percent to 4.42 percent, while the Overnight (OVN) rate decreased by 1.47 percent to settle at 5.42 percent.
The drop in the cost of funds came as market players anticipated further inflows from FAAC payments to states and local governments in the country.
System Liquidity which opened the day at N422 billion is estimated to close on Monday at N688 billion, due to Inflows from FAAC which helped offset outflows for a wholesale SMIS Auction by the CBN.
The rates are expected to remain relatively stable due to the significantly buoyant level of system liquidity.
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