Rates to Crash as N1.4tr Hits Market This Week

By Modupe Gbadeyanka

The interbank lending rate is expected to decline this week as a result of the huge amount of liquidity hitting the market.

A total of N1.36 trillion will hit the market of which N551.36 billion is of maturing treasury bills via both the primary and secondary markets, while N812.76 billion is from the federally collected revenue distributed by FAAC.

This N1.4 trillion inflows will boost financial system liquidty and result in a corresponding downward trend in NIBOR, analysts at Cowry Asset said in their weekly report.

Last week, the Central Bank of Nigeria (CBN) sold treasury bills worth N24.60 billion through Open Market Operations. The outflows partly offset the inflows from the matured T-bills worth N497.82 billion.

The net inflow mainly contributed to the fall in NIBOR for 3 months and 6 months tenure buckets amid financial system liquidity to 14.31 percent from 15.21 percent and 14.53 percent from 15.24 percent respectively; however, NIBOR for overnight funds and 1 month rose to 25.93 percent from 25.19 percent and 15.86 percent from 15.48 percent respectively.

Meanwhile, NITTY fell for most maturities tracked amid renewed investors’ interest in short term instrument: yields on 3 month, 6 months and 12 months moderated to 13.48 percent from 14.34 percent, 13.93 percent from 14.42 percent and 17.42 percent from 17.55 percent respectively; however, yield on 1 months rose to 15.27 percent from 14.90 percent.