N200bn OMO maturity to boost liquidity, moderate rates

There are indications that N200.9 billion Open Market Operation (OMO) maturity will buoy system liquidity and bring moderation to interbank rates.

According to one dealer, “in the coming week, we expect an OMO maturity of N200.9 billion to buoy system liquidity. Nonetheless, we believe the outcome of the last MPC meeting for the year would dictate activities in the money market – particularly sentiment for Treasury Bills.”

Meanwhile, performance in the Treasury Bills market was broadly bullish last week as average rates fell on three of five sessions.

The week started with sell-offs across long dated instruments as average rate (across three benchmarks tracked by Afrinvest) rose 3bps to 17.0 per cent. However, performance was reversed on Tuesday as average rate fell 16bps to 16.8 per cent after the National Assembly granted the FGN’s request to raise external debt to refinance expensive T-bills.

On Wednesday, rates fell further to 16.5 per cent on average but rose 18bps to 16.7 per cent on Thursday, closing at same level on Friday, indicating a 27bps decrease W-o-W.

At the Primary Market auction (PMA), the CBN auctioned N32.4 billion, N22.8 billion and N64.7 billion of the 91-day, 182-day and 364-day instruments. Given investors’ expectation of a near term monetary easing, the 91-day and 182-day instruments were under-subscribed by 54 per cent and 38 per cent while the 364-day instrument was oversubscribed by 2.2 times.

Accordingly, dealers said the Apex Bank allotted N6.0 billion apiece for the 91-day and 182-day instruments while N107.9 billion was allotted for the 364-day instruments at previous stop rates of 13.0 per cent, 15.3 per cent and 15.6 per cent respectively.