Rates to trend lower on N479.7bn OMO maturities

Money Market rates are expected to trend lower in the week ahead following an anticipated Open Market Operation (OMO) maturities worth N479.7billion (OMO: N434.7bn; T-bills: N45.0bn) to hit the system.

Also, in the new week, dealers from Cowry Assets Management Limited said they expect Treasury-bills worth N586.69 billion that will mature via the primary and secondary markets will more than offset T-bills worth N152.00 billion to be auctioned by the Central Bank of Nigeria (CBN) via the primary market; viz: 91-day bills worth N5.85billion, 182-day bills worth N26.60 billion and 364-day bills worth N119.55 billion.

“Hence, we expect liquidity ease in the financial system to be sustained with resultant moderation in NIBOR. We also expect the stop rates to decline marginally amid increasing demand for the instruments,” the dealers stated in a note to clients.

Meanwhile, other dealers expect the CBN to continue with its liquidity mop-up via OMO sales, even as they do not see a change in the yield direction on the back of continued buy interest. The low yield should help sustain investor interest in equities as the search for higher return toughens.

However, given the sustained demand pressure for T-bills backed by boost in financial system, liquidity, Nigeria Interbank Treasury True Yields (NITTY) for all maturities tracked closed southwards.

True yields on one month, three months, six months and 12 months maturities

moderated to 3.53 per cent (from 3.65 per cent), 3.28 per cent (from 3.99 per cent), 4.00 per cent (from 4.83 per cent) and 4.19 per cent (from 5.26 per cent) respectively, while values of FGN bonds traded at the over-the-counter (OTC) segment appreciated further for most maturities tracked in line with expectations.