Expected N20.0bn worth of OMO maturities to buoy liquidity, lower rates

There are expectations that the Central Bank of Nigeria (CBN) would maintain its mop-up operations especially as Open Market Operation (OMO) maturities worth N20.0 billion would hit the system.

Also, dealers envisage system liquidity would remain elevated driving rates lower in the secondary Treasury-Bills market.

Similarly, dealers expect average bond yields in the domestic market to trend higher as demand pressure dissipates amid tight liquidity conditions.

Also, “We anticipate bearish performance in the Sub-saharan Africa (SSA) and Corporate Eurobonds market as investors seek less risky assets in advanced economies,” a dealer said in a note to clients.

Meanwhile, the CBN allotted N240.26 billion worth of T-bills (which outweighed the N145.11 billion bills that matured via the primary market) to investors at higher stop rates for all maturities –reflective of the low level of liquidity in the system that chased short-term government securities.

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Specifically, dealers from Cowry Assets Management Limited said stop rates for 91-day, 182-day and 364-day bills rose to 6.50 per cent (from 6.47 per cent), 8.05 per cent (from 7.90 per cent) and 14.50 per cent (from 13.00 per cent) respectively.

However, given the relatively higher rate in the secondary market, Nigeria Interbank Treasury True Yields (NITTY) rose for most maturities tracked.

“Despite that N30 billion matured via the Open Market Operation (OMO), we saw a strain in financial system liquidity and a resultant rise in Nigeria Interbank Offered Rate (NIBOR) for Overnight funds, three months and 12 months rose to two to 9.84 per cent (from 9.76 per cent), 11.14 per cent (from 11.13 per cent) and 16.73 per cent (from 16.63 per cent), respectively,” the dealers noted.