Rates to trend higher on OMO mop-ups, bond auction

Despite the level of system liquidity at N371.5billion as of Friday, dealers are expectant that money market rates will trend slightly higher on the back of expected Open Market Operation (OMO) mop-ups and the planned Wednesday bond auction of N100 billion.

This is also notwithstanding Thursday OMO maturity of N37.9billion.

The Federal Government offered for subscription by auction N100 billion worth of bonds in its February 21 auction, the Debt Management Office (DMO) said.

The offer circular obtained from the DMO website stated that it would sell N50 billion of a bond maturing in July 2021 at 14.50 per cent.

It would also sell N50 billion to mature in February 2028. but however, did not state the interest rate for the February 2028 issue.

The July 2021 bond is a re-opening of previous issues, while the February 2021 bond is a new 10 year issue.

Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.