Modupe Gbadeyanka
By Modupe Gbadeyanka
On Wednesday, the Central Bank of Nigeria (CBN) will refinance treasury bills worth N158.65 billion at the primary market auction (PMA).
According to Cowry Asset, stop rates at the exercise are anticipated to further move northwards as the apex bank looks to reduce the high capital outflow from the economy by foreign portfolio investors, who are reacting to decline in the yields.
Many months ago, T-bills yields were hitting 18 percent until the CBN lowered it to 11 percent, which made some investors to exit the market for better yields elsewhere.
At this week’s PMA, the central bank would offer N15 billion worth of 91-day bills, N14 billion worth of the 182-day instrument and N129.65 billion worth of the 364-day maturity to market players.
Commenting on the forthcoming exercise, Cowry Asset said, “We expect their stop rates to rise amid increased investors’ demand for higher returns on investment.”
“Also, with the maturing OMO bills of N347.68 billion, we expect interbank rates to moderate further,” the Lagos-based investment company added.
Last week, the apex bank sold N322.60 billion in the secondary market; the total outflows partly offset the inflows from the matured T-bills worth N553.84 billion, hence, the sustained ease in financial system liquidity.
In line with expectation, NIBOR moderated for most tenor buckets; NIBOR for overnight funds, one month and 6 months tenure buckets fell to 4.35 percent from 9.25 percent, 13.78 percent from 13.99 percent and 14.68 percent from 14.98 percent respectively.
However, NIBOR for 3 months tenure bucket rose to 13.98 percent from 12.98 percent.
Meanwhile, NITTY moved in different directions across maturities tracked in the secondary market as yields on one month and 6 months maturities contracted to 12.52 percent from 12.62 percent and 13.15 percent from 13.71 percent respectively.
However, yields on 3 months and 12 months maturities rose to 13.02 percent from 12.17 percent and 15.11 percent from 14.41 percent respectively.
