CBN’s SDF, OMO, Repayments, boost Markets as Liquidity Hits N6.17trn

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• As 173 Day OMO records 551% over subscription
• Investors look up to midweek N700bn auction

BY BONNY AMADI

System liquidity in the Nigerian money market opened last week firmly in surplus at N3.8 trillion, only slightly below the previous close of N3.91 trillion.

The improvement was underpinned by increased placements at the CBN’s Standing Deposit Facility (SDF), alongside OMO maturities and primary market repayments, which collectively pushed net liquidity to a hefty N6.17 trillion.

This represents a remarkable 57.80 per cent week-on-week surge from the preceding week’s N3.91 trillion. The abundant cash in the system translated into softer funding pressures, as banks had little need to borrow.

The Overnight Nigerian Interbank Offered Rate (NIBOR) moderated by 2bps to 24.86%, while the 1-month, 3-month, and 6-month tenors declined by 9bps, 64bps, and 18bps, settling at 25.57 per cent, 25.78 percent, and 27.08 percent, respectively.

In contrast, the overnight rate inched up 13bps to 24.92 per cent, while the funding rate held steady at 24.50 per cent.

Across the Nigerian Inter-Bank Treasury Bills True Yields (NITTY) curve, yields mostly declined, except for the 1-month NITTY, which edged higher by 0.07 percentage points to 16.62 per cent.

The 3-month, 6-month, and 12-month yields fell sharply by 16bps, 32bps, and 86bps, closing at 16.46 percent, 17.05 percent, and 17.99 percent.

Momentum in the secondary Treasury Bills market was solid throughout the week as strong demand filtered across short-, mid-, and long-dated maturities.

The newly issued 5-Nov bill led the rally, tightening from 15.70 percent to around 15.30 percent as unmet auction bids spilled into the secondary market. This firm buying interest dragged the average NTB yield lower by 44bps to 16.98 percent.

OMO market activity was equally vigorous, powered by the system’s liquidity glut. Average OMO yields dipped by 15 percentage points to 21.74 percent, with trading heavily concentrated on the newly issued 5-May OMO bill.

The week’s major highlight was the November 13 OMO auction, where the CBN sold N2, 547.55 billion across the 152-day and 173-day bills.

The 152-day tenor cleared at N645.15 billion with a stop rate of 20.59 percent, while the 173-day tenor saw a massive N2, 445.40 billion sold at 20.69 percent.

Demand was overwhelming, with total subscriptions hitting N3, 090.55 billion, marking a staggering 515 per cent oversubscription. Looking ahead this week, sentiment is expected to remain broadly positive as the market prices in continued expectations of easing inflation.