The Overnight Nigerian Interbank Offered Rate (NIBOR) inched up by 0.04 percentage points week-on-week to 32.92% to close on Friday, reflecting tighter liquidity conditions in the banking system.
Increased participation in the Central Bank of Nigeria’s (CBN) Standing Lending Facility (SLF) window contributed to the liquidity squeeze, pushing the system into a net deficit position.
Meanwhile, NIBOR rates for longer tenors trended downward, with the 1-month, 3-month, and 6-month rates settling at 26.89%, 27.72%, and 28.84%, respectively.
Similarly, the Nigerian Treasury Bills Yield (NITTY) declined across all maturities, driven by the sharp drop in inflation to 24.48%, expectations of a rate cut by the CBN, and the marginal decline in stop rates at the recent primary market auction.
The N1.29 trillion in T-bill maturities further influenced yields, with the 1-month, 3-month, 6-month, and 12-month tenors settling at 19.49%, 18.76%, 19.65%, and 21.83%, respectively.
The treasury bills secondary market witnessed persistent buying interest across short, mid, and long tenors, causing the average market yield to decline sharply by 189 basis points to 20.20% from 22.08% in the prior week.
Meanwhile, the CBN conducted a Nigerian Treasury Bills (NTB) primary market auction (PMA) on Wednesday, offering instruments worth N700 billion across 91-day, 182- day, and 364-day tenors.
Investor demand was strong, with total subscriptions reaching N2.41 trillion, reflecting a bid-to-cover ratio of 3.11x. In response, the CBN allotted N774.13 billion in total sales.
Thus, stop rates declined across the three maturities, with the 91-day, 182-day, and 364-day papers settling at 17.00%, 18.00%, and 18.43%, respectively, down from 18.00%, 18.50%, and 20.32% at the last auction.
Looking ahead, investment analysts anticipate a bullish money market in the coming week, with higher activity levels as investors seek to lock in attractive yields in the secondary market following the CBN’s decision to pause interest rate hikes.
