Selloffs at T-Bills Market as Lending Rate Jump to 19.42%

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By Dipo Olowookere

There was a selling pressure on the treasury bills space on Tuesday as investors reacted to the directive to five states by the federal government to return the amount they got recently from the Paris Club refund to them.

One of the states was Osun State, which received N17 billion few days to the September 22, 2018 governorship election, which was declared inconclusive by the Independent National Electoral Commission (INEC), with a supplementary poll slated for this Thursday.

The reversal of the Paris Fund refund, according to analysts at Zedcrest Research, led to a significant decline in system liquidity today.

Specifically, there were some selloffs witnessed mostly on the shorter end of the curve, which consequently left the T-bills market bearish with the average yields inching higher by 0.35 percent at the close of transactions.

Yields are expected to remain slightly elevated until Thursday, where inflows from OMO T-bills maturities are expected to bolster system liquidity and fuel some buying interests in the market.

Meanwhile, the average money market rate increased by 9.99 percent on Tuesday to settle at 18.71 percent, following the 9.64 percent and 10.34 percent hike in the Open Buy Back (OBB) and Overnight (OVN) rates, which finished at 18 percent and 19.42 percent.

It was observed that the money market rates recorded such significant growths as a result of debits by the Central Bank of Nigeria (CBN) in respect of reversal of Paris Club payments to states by the federal government.

System liquidity consequently declined sharply to N122 billion from N478 billion previously and the rates are expected to high as there are no significant inflows expected on Wednesday.

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