Rates to Rise as N107bn T-Bills Mature

By Modupe Gbadeyanka

There are strong indications that the interbank interest rates at the money market will skyrocket this week as about N107 billion hit the market on Thursday via maturing treasury bills.

According to analysts at Cowry Asset, during the week, the market will experience squeeze in financial system liquidity.

They said the strain in the liquidity would occur as a result of an expected debt auctions worth N100 billion by the Debt Management Office (DMO) on Wednesday, where another 10-year and 30-year notes would be issued to investors.

During trading last week, the Central Bank of Nigeria (CBN) auctioned T-bills worth N33.84 billion via the primary market.

The stop rates for 182-day and 364-day bills moderated to 12.30 percent from 12.49 percent and 12.49 percent from 12.77 percent respectively amid investors’ high demand for short term fixed income securities.

During the exercise, the 182-day and 364-day debt instruments were over-subscribed by 202.25 percent and 875.41 percent respectively. However, stop rate for 90-day bills was flattish at 10.00 percent.

The total outflows worth N33.84 billion partly offset the total matured bills worth N140.95 billion, hence, the financial system was awash with liquidity ease.

Consequently, NIBOR fell for most tenure buckets: NIBOR for overnight funds rate, 3 months and 6 months tenure buckets moderated to 5.07 percent from 9.17 percent, 12.19 percent from 12.72 percent and 14.09 percent from 14.36 percent respectively; however, NIBOR for one month rose to 12.13 percent from 11.83 percent.

Meanwhile, NITTY fell for most maturities tracked as rates fall in the primary market – yields on 3 months, 6 months and 12 months contracted to 10.60 percent from 11.51 percent, 12.49 percent from 13.31 percent and 13.71 percent from 14.16 percent respectively. However, yields on one month maturity rose to 11.13 percent from 10.25 percent.