Rates to moderate on N317.32bn inflow

EXPECTATIONS of rate moderations are high in the money market as N317.32 billion maturities are expected to hit the system this week.

Dealers said N140.01 billion of Open Market Operation (OMO) bills will be maturing, just as treasury bills worth N177.31 billion is expected to also mature this week.

The combined inflows are expected to boost liquidity in the system with attendant moderation in interbank lending rate.

“Our short term outlook for T-bills remains bullish against the backdrop of relatively lower FGN domestic borrowings and CBN policy easing bias,” one dealer said.

Performance in the Treasury Bills market was largely bullish last week as average rate across tenors traded lower on three of five trading days. The week started on a relatively flat note although average rate across benchmark tenors declined 2 base points (bps) to 13.9 per cent. Rates remained flat midweek even as the CBN carried out a Primary Market Auction (PMA) in which the 91-day (offered: N5.4 billion, subscription: N5.6 billion, Allotted: N5.4 billion), 182-day (offered: N26.9 billion, subscription:N13.7 billion, allotted:N8.4 billion) and 364-day (offer: N21.6 billion, subscription: N60.7 billion, allotted: N40.2 billion) tenors were allotted at stop rates of 11.95 per cent, 13.00 per cent and 13.15 per cent respectively.

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The 182-day instrument was the only undersubscribed and under the allotted instrument. Average T-bills rate closed the week at 13.6 per cent, down 1bp W-o-W .

Meanwhile, recent data from the Debt Management Office (DMO) shows a lowering trend in domestic costs of borrowing by the Nigerian government.

The percentage paid on securities have reduced by estimates of 650 base points for treasury bills, with 364-day maturity and 250 base points or 2.5 per cent for bonds issued on July 21, 2017.

This drop in yields on government’s debt instruments has occurred within a six-month period. The drop is catalysed by the government’s efforts to restructure its debts.