N283.79bn NT-Bills Matures as money market rates spikes

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• Tight interbank funding prevails

BY BONNY AMADI

In the new week, N283.79 billion worth of NT-Bills are set to mature this week, likely boosting system liquidity.

However, in the absence of a new auction, market activity is expected to pivot to the secondary market, where investor demand is anticipated to remain tilted toward longer-dated instruments.

Despite improved liquidity, analysts expect money market rates to remain elevated, driven by tight inter- bank funding and sustained demand for short-term borrowing.

Meanwhile, last week, Liquidity Surged but Rates Stayed Elevated as Markets Eye Secondary T-Bills.

Nigeria’s money market opened the new week on a mixed note, despite a combined inflow of N2.01 trillion from Open Market Operation (OMO) maturities and FAAC allocations, which ended last week

While the N350 billion OMO maturity and N1.66 trillion FAAC injection were expected to ease liquidity pressures last week, they failed to provide clear directional momentum, as funding demand among financial institutions remained elevated.

Short-term interbank lending rates climbed higher, with the Overnight Nigerian Interbank Offered Rate (NIBOR) rising to 27.61%, up from 26.74% the previous week.

Similarly, the 1-month, 3-month, and 6-month NIBOR tenors closed higher at 27.68%, 28.14%, and 28.71%, respectively—highlighting sustained tightness in the funding market. Key monetary aggregates followed suit, as the Overnight (OVN) and Open Buy Back (OPR) rates rose by 167bps and 193bps, settling at 28.17% and 28.92%, respectively.

In contrast, yields in the fixed income market trended downward, as the Nigerian Interbank Treasury True Yield (NITTY) curve declined across all key tenors. The 1-month, 3-month, 6-month, and 12-month benchmarks dropped to 17.45%, 18.39%, 20.01%, and 22.56%, respectively, reflecting strong buying interest—especially in the long end of the market— on the back of this week’s Treasury bills auction.

At the Primary Market Auction (PMA) held on June 18, the Central Bank of Nigeria (CBN) sold N162.02 billion in NTBills—markedly lower than the N450 billion offered at the previous auction. The auction covered the 91-day, 182-day, and 364-day tenors, with allotments of N37.98 billion, N40.54 billion, and N83.50 billion, respectively. Despite the reduced supply, demand was exceptionally strong, with total bids hitting N1.23 trillion, indicating a 661% oversubscription.

The bulk of investor interest was skewed toward the 364-day bill, which alone attracted N1.01 trillion in subscriptions.

The bid-to-cover ratios came in at 3.30x (91-day), 1.59x (182-day), and an exceptional 10.97x (364-day), averaging an overall 7.61x, up sharply from 2.91x at the previous auction. Stop rates declined across all tenors: the 91-day bill cleared at 17.80% (-18bps), the 182-day at 18.35% (-15bps), and the 364- day at 18.84% (-51bps), underscoring the demand-driven yield compression.