NIBOR Rises for Most Maturities on Liquidity Squeeze – SLF hits N1.35 trillion…

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In the just concluded week, CBN repayed
matured T-bills worth N108.54 billion via OMO.

In line with our expectation, there was liquidity strain in the financial system despite the repayment of same amount as the standing lending facilities (SLF) stood at N1.35 trillion, outweighing the standing deposit (SDF) facilities of only N21.15 billion.

Given the heavy borrowing by banks from CBN, as SLF remained relatively high – indicative of liquidity squeeze –, NIBOR rose for most tenor buckets.

Specifically, NIBOR for 1 month, 3 months and 6 months tenor buckets increased to 5.35% (from 3.91%), 5.73% (from 3.95%) and 6.24% (from 4.37%) respectively.

However, NIBOR for overnight funds decreased to 14.25% (from 19.00%).

Meanwhile, NITTY moved northwards for most maturities tracked amid investor sell pressure; hence, yields on 3 months, 6 months and 12 months maturities rose to 1.72% (from 1.65%), 2.10% (from 1.89%) and 3.20% (from 3.07%) respectively.

However, yield on 1 month maturity fell to 1.58% (from 1.62%).

In the new week, T-bills worth N179.60 billion will mature via the primary market which will exceed T-bills worth N107.05 billion to be auctioned by CBN via the primary market; viz: 91-day bills worth N5.85 billion, 182-day bills worth N26.60 billion and 364-day bills worth N74.60 billion.

Hence, we expect the stop rates of the issuances to decline amid investor’s preference for fixed income security.

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