Rates to trend downwards on expected N229.60bn liquidity boost

There are expectations that the interbank rates will trend downwards due to liquidity boost, occasioned by Treasury Bills (T-bills) maturities worth N229.60 billion via the secondary market this week.

Also, dealers expect the Federal Government’s bond prices to increase in this week (with corresponding fall in yields) at the Over the Counter (OTC) market amid expected ease in financial system liquidity.

Meanwhile, dealers said an auction of one-year Nigerian treasury bills drew demand of N1.2 trillion  ($3.9 billion) on Thursday, more than 20 times the amount offered, as foreign investors sought to lock in high yields.

The central bank had offered to sell N250 billion  and priced the offering at 14.3 percent as demand surged. The same maturity was sold at 15 percent a week earlier.

Reuters earlier reported that Bond investors had been worried the elections would turn violent, not about who won, traders said. President Muhammadu Buhari has favoured a strong and stable currency, which bondholders hope will continue.

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With election risk out of the way, traders said bond buyers were factoring in expectations that the central bank would start to increase liquidity to improve funding conditions.

The trader said foreign investors bought around 70 percent of the bills at the auction, which has helped lift the currency.

On the bond market, the benchmark 2028 debt was flat on Friday at around 13.9 percent from its previous session. It fell to six months low of 14.3 percent on Wednesday after Buhari won re-election.