Interbank rates moderates on OMO & T-bills maturities

 

Activities in the money market this week, Open Buy Back (OBB) and Overnight (OVN) rates fell week-on-week as system liquidity improved towards the end of the week following OMO & T-bills maturities which hit the system. At the start of the week, OBB and OVN rates rose 10.7ppts and 12.1ppts to settle at 22.5 percent and 25.0 percent respectively (from 11.8 percent and 12.9 percent recorded the prior week) as the impact of CBN OMO auction and weekly FX intervention offset N87.0 billion bond coupon payment. At the OMO auction, the CBN issued 101-day instrument (Offered: N50.0 billion, sold: N5.3 million) and 227-day instrument (Offered: N100.0 billion, Sold: N111.2 billion) instruments at 12.6 percent and 14.4 percent respectively. On Tuesday, the OBB and OVN rates increased 7.5ppts and 7.3ppts to 30.0 percent and 32.3 percent respectively, attributable to a further squeeze in system liquidity which opened at N45.1 billion.
The trend reversed mid-week as the OBB and OVN rates moderated 10.0ppts and 10.2ppts to close at 20.0 percent and 22.1 percent. This was sustained till Thursday as rates further eased to at 6.8 percent (OBB) and 8.1 percent (OVN), attributable to improvement in system liquidity which increased following OMO (N151.1 billion) and T-bills (N107.9 billion) maturities which hit the system. OBB and OVN rates closed the week at 6.8 percent and 8.1 percent, 5.0ppts and 4.8ppts lower week-o-week respectively.
Performance in the Treasury Bills market was largely bullish as average rate across tenors traded lower on 3 of 5 trading days. The week started on a relatively flat note although average rate across benchmark tenors declined 2bps to 13.9 percent. Rates remained flat midweek even as the CBN carried out a Primary Market Auction (PMA) in which the 91-day instrument (offered: N5.4 billion, subscribed: N5.6 billion, Allotted: N5.4 billion), 182-day instrument (offered:N26.9 billion, subscribed :N13.7 billion, allotted:N8.4 billion) and 364-day instrument (offer: N21.6 billion, subscribed: N60.7 billion, allotted: N40.2 billion) tenors were allotted at stop rates of 11.95 percent, 13.00 percent and 13.15 percent respectively. The 182-day instrument was the only undersubscribed and under allotted instrument. Average T-bills rate closed the week at 13.6 percent, down 1 basis point week-o-week.
In the coming week, N140.01 billion of OMO bills will be maturing.