Stop Rates Rise for Most Maturities as CBN Mops Up N1 trillion in H2 2019…

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In the just concluded week, the CBN refinanced matured T-bills worth N158.65 billion via Primary market while N528.02billion was sold via OMO.

For the primary market issues, stop rates for the 182-day and 364-day bills increased, in line with our expectation, to 11.79% (from 11.59%) and 13.28% (from 12.90%) respectively, amid expectations that the apex bank will auciton T-bills worth a whopping N1.00 trillion in H2 2019.

However, stop rate for the 90-day bill was flattish. On Thursday, N347.68 billion worth of treasury bills matured via OMO, which combined with the primary market maturies, resulted in total inflows worth N506.33 billion.

Overall, outflows exceeded maturities, NIBOR for overnight funds spiked to 22.33% (from 4.35%), especially on Friday.

Nevertheless, NIBOR moderated w-o-w for 1 month, 3 months and 6 months tenure buckets to 13.12% (from 13.78%), 13.63% (from 13.98%) and 13.95% (from 14.68%) respectively.

Meanwhile, NITTY fell for most maturities tracked amid renewed bullish activity – yields on 1 month, 3 months and 6 months declined to 12.19% (from 12.52%), 11.82% (from 13.02%) and 12.82% (from 13.15%) respectively; however, 12 months maturity rose to 15.13% (from 15.11%).

In the new week, CBN will refinance T-bills worth N179.75 billion, viz: 91-day bills worth N3.00 billion, 182-day bills worth N8.39 billion and 364-day bills worth N168.36 billion.

We expect their stop rates to rise amid increased investors’ demand for higher returns on investment.

Also, with the maturing OMO bills of N356.51 billion, we expect interbank rates to moderate further.

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