Stop Rate for 364-day Bill Rises as Naira Depreciates Further at the I & E Fx Window…


In the just concluded week, CBN sold T-bills worth N115.42 billion to mop up the matured N111.87 billion bills. The issuance of 364-day bill at a higher stop rate was amid further depreciation of the Naira against the USD despite the USD4 billion inflow from eurobonds.

Specifically, stop rates for 91-Day, 182-Day bills were unchanged at 2.5% and 3.5% respectively.

However, stop rate for 364-day bill rose by 30bps to 7.50% from (7.20%).

Notably, the hike in rate by CBN was against market expectations, hence the reason for the lower yield across all maturites tracked.

NITTY for 1 month, 3 months, 6 months and 12 months moderated to 3.26% (from 3.47%), 3.90% (from 4.15%), 4.86% (from 5.08%) and 7.46% (from 8.01%) respectively.

Elsewhere, given the strain in the financial system liquidity and in spite of the matured OMO bills worth N101.61 billion, we saw banks borrow as much N416.15 billion from CBN as lending facility outweighed standing deposit facility worth N39.25 billion.

Also, the N152.35 billion worth of Repo transactions further emphasis cash pressure for some banks.

Hence, NIBOR rose for most tenor buckets: 1 month, 3 months and 6 months jumped to 15.03% (from 9.47%), 16.20% (from 10.17%), and 16.83% (from 10.83%) respectively. Overnight rate however fell to 14.70% (from 19.65%).

In the new week, we expect activity in the money market to be muted in the absence of maturities, hence the direction of the true yield would be influenced by the auction result in the bond market.