Categories: Business

Liquidity glut, mop-up expected as N345.3bn inflow hit financial system

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3 years ago

Patience Oniha, DG, DMO

THERE are anticipations of excess liquidity that will cause the Central Bank of Nigeria (CBN) to conduct liquidity mop-up as inflows from Primary Market Auction (PMA) and Open Market Operation (OMO) maturities worth (N345.3 billion) N115.3 billion and N230.0 billion, respectively hit the system.

Hence, dealers expect funding rates to hover around current levels.

Similarly, “we expect an increase in liquidity from coupon inflow worth N66.8 billion, spurring a persistent bullish trend. For the Eurobond markets, we anticipate that the weak sentiment would be sustained,” say analysts from Afrinvest (West) Africa Limited.

Last week, the Central Bank of Nigeria, on the authority of the Debt Management Office (DMO) on behalf of the Federal Government of Nigeria, auctioned N150 billion worth of bonds in its latest offer for Subscription by Auction.

The debt office described the offer as N75 billion FGN January 2026 (10-year re-opening) with 12.50 per cent rate and N75,000,000,000 – 13.00 FGN JAN 2042 (20-year re-opening).

The offer is in N1,000 per unit subject to a minimum subscription of N50,001,000 and in multiples of N1,000 thereafter with auction date of February 16, 2022 and settlement date of February 18, 2022.

For re-openings of previously issued bonds, (where the coupon is already set), successful bidders would pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus accrued interest from the original issue date, the DMO stated in a notice.

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