Interbank rates to ease as N135.41bn maturities boost liquidity

There are high expectations that N135.41 billion worth of maturities will further boost financial system liquidity and lead to a decline in interbank rates dealers at Cowry Assets Management Limited have said.

In a note to investors over the weekend, the dealers said, “This week, we expect maturities via secondary market worth N135.41 billion viz: 345-day bills; hence, we look forward to further financial system liquidity ease and resultant decline in interbank rates.”

Meanwhile, the top investment management firm, Cowry Asset Management Limited, has released its 2017 half-year review and outlook for the second half of this year.

In the report, the firm noted that treasury bills sales by the Central Bank of Nigeria (CBN), which were greater in H1 2017 relative to the corresponding period of the preceding year, came at higher cost as the short term debt instruments were auctioned at double the stop rates in the review period (relatively to H1 2016) amid surging inflationary trends occurring alongside a contracting economy.

The firm remarked that average stop rates for the 91-day, 182-day and 364-day bills increased to 13.64 per cent (from 6.40 per cent in H1 2016), 17.28 per cent (from 8.51 per cent in H1 2016) and 18.67 per cent (from 10.25 percent in H1 2016) respectively.

It added that the 182-day and 364-day bills yielded positive real returns as inflation rate average averaged 17.23 per cent.

In a related development, Cowry Asset Management Limited said real returns remained negative in first half of 2017.

The firm pointed out that commercial banks’ depositors took higher deposit rates in H1 2017 compared to H1 2016 in line with general funds market trend.

This was however eroded by rising inflation rates, resulting in significantly negative real returns with 30 days bank deposit rates averaging 8.61 per cent in the review period (higher than 6.71 per cent in H1 2015); interest rates on three-month deposits averaged 9.17 per cent in the review period (higher than 6.86 per cent in the corresponding period of 2016); while interest rates on 12 months deposits averaged 10.76 per cent in the review period (compared to 5.24 per cent in same period of 2016).