Interbank rates to decline on N159.68bn net inflows

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8 years ago

There are high expectations of a decline in interbank rates following scheduled inflows that dealers said will not be fully offset by corresponding outflows.

Dealers said this week, there will be maturing treasury bills worth N333.83 billion viz: 91-day bills worth N39.01 billion, 182-day bills worth N48.45 billion, 356-day bills worth N159.68 billion and 364-day bills worth N86.69. This will be partly offset by treasury bills auctions worth N174.15 billion, viz 91-day bills worth N39.01 billion, 182-day bills worth N48.45 billion and 364-day bills worth N86.69 billion.

According to dealers from Cowry Assets Management Limited, “We expect their stop rates to moderate in line with short term expectations of lower inflation. Hence, at the interbank market, we expect financial system liquidity to ease, with resultant decline in interbank rates, due to the net inflows.”

Also, other dealers from Afrinvest Securities Limited believe that in the week ahead, money market rates will trend in line with system liquidity dynamics. They said, “There will be an OMO maturity of N159.68billion which we expect the apex bank to mop up via new OMO issuances.”

Meanwhile, performance of the Nigerian corporate Eurobonds market was bullish as yields fell on all instruments save for the FIRST BANK 2021 (up 4bps W-o-W to 10.7 per cent). Buying interest was seen mostly on the ACCESS 2021 senior bond (down 45bps W-o-W to 7.4 per cent) and the ACCESS 2021 subordinated bond (down 35bps W-o-W to 8.5 per cent). Year to date (YTD), all instruments have returned positive with DIAMOND 2019 leading the pack with a return of 21.9per cent followed by the FIRST BANK 2021 with YTD gain of 19.1 per cent.

Performance across the Sub-Saharan Africa (SSA) sovereign Eurobonds was positive week before last as yields closed lower on all SSA instruments within coverage. Yields declined 7bps, 58bps, 10bps, 6bps, 9bps, 4bps and 17bps on average across Nigerian, Ghanaian, Gabonese, Ivory Coast, Kenyan, Zambian, Senegalese and South African sovereign instruments being tracked. Afrinvest says the bullish performance was on the back of dovish comments from the European Central Bank (ECB) and US Fed officials which spurred bullish bets on bonds in developed markets.