Investors Anticipate Further Hike in Stop Rates at Wednesday’s N255b PMA

By Modupe Gbadeyanka

Financial experts are projecting that this week, there would be a sustained ease in liquidity in the banking system, which should lower interbank rates.

This is because during the week, the market would be experiencing an outflow of N254.6 billion in the sale of fresh treasury bills and the inflow of N446.7 billion from maturing bills.

On Wednesday, the central bank is expected to conduct the last primary market auction (PMA) of T-bills for the month of January 2019.

During the exercise, the apex bank is anticipated to offer 91-day bills worth N7.85 billion, 182-day bills worth N69.57 billion and 364-day bills worth N177.22 billion.

There are indications that the stop rates for the PMA should further increase, given the rising inflationary pressure in the near-term.

The next day, T-bills worth N446.68 billion will mature via the primary and secondary markets which will more than offset N254.6 billion from the previous day’s PMA.

Last week, the CBN auctioned treasury bills worth N305.08 billion in the secondary market and the total outflows partly offset the inflows from the matured T-bills worth N381.54 billion.

According to analysts at Cowry Asset, the net inflow resulted in financial system liquidity ease in line with its expectations.

Hence, NIBOR for overnight funds and 1 month tenure buckets moderated to 12.96 percent from 16.96 percent and 13.18 percent from 14.42 percent respectively.

On the other hand, NIBOR for 3 months and 6 months tenure buckets rose to 13.49 percent from 13.01 percent and 14.87 percent from 14.86 percent respectively.

Meanwhile, NITTY moved in mixed directions across maturities tracked. While yields on 1 month and 12 months maturities fell to 12.06 percent from 13.97 percent and 17.11 percent from 17.18 percent respectively, yield on the 3 months and 6 months maturities rose to 12.33 percent from 11.81 percent and 14.06 percent from 13.88 percent respectively.