- As Liquidity Glut Meets Aggressive CBN Mop-Up
BY BONNY AMADI
Nigeria’s money market remained highly liquid over the past week despite aggressive liquidity mop‑up actions by the Central Bank of Nigeria (CBN).
System liquidity which opened the week stronger at N5.60 trillion from N4.96 trillion recorded at the close of the previous week and eventually settled slightly higher at N5.67 trillion.
The boost in system liquidity was supported by inflows from N767 billion OMO maturities and N556.02 billion Treasury bills repayments.
However, liquidity deb‑ its arising from Treasury bills and OMO auction settlements exerted mild pressure on interbank rates as the Overnight Nigerian Inter Bank Offered Rate (NIBOR)rose by 8 basis points week‑on‑week to 22.33%.
Similarly, the 1‑month, 3‑month, and 6‑month NI‑ BOR advanced to 22.90%, 23.60%, and 24.34% respectively.
In contrast, funding rates remained relatively stable, with the Open Repo Rate (OPR) holding steady while the Overnight Rate (OVN) declined marginally by 11 basis points to 22.19%, reflecting still‑robust liquidity conditions within the banking system.
Meanwhile, activities across the Treasury bills market remained bullish as investors continued to chase elevated yields amid lingering macroeconomic uncertainty.
The Nigerian Interbank Treasury True Yield (NIT‑ TY) curve trended largely downward during the week, with the 1‑month, 3‑month, and 12‑month tenors easing to 15.84%,16.09%, and 18.92% respectively, even as the 6‑month tenor rose slightly by 17 basis points.
Consequently, average secondary market Treasury bills yield declined by 4 basis points to 17.51% on the back of sustained buy‑side interest across maturities.
At the NTB auction, investor demand remained exceptionally strong as total subscriptions surged to N2.40 trillion against the N700 billion offered by the Debt Management Office (DMO).
This translates to a 3.4x oversubscription rate.
However, final allotments settled at N731.80 billion, while stop rates on the 182‑day and 364‑ day bills declined marginally to 16.14% and 16.15% respectively, the still elevated sub‑ scription rate, reinforced the bullish fixed income sentiment.
Similarly, the CBN’s OMO auctions recorded overwhelming investor participation during the week, highlighting persistent ap‑ petite for short‑dated risk‑ free instruments.
At the week’s Mon‑ day’s auction, the 8‑day OMO bill attracted subscriptions worth N1.07 trillion against the N300 billion offered, implying a 3.6x oversubscription rate, while the 134‑day tenor re‑ corded N640.10 billion in subscriptions against the same N300 billion offer.
Furthermore, the apex bank’s Thursday OMO auction attracted total subscriptions of N1.64 trillion against the N600 billion offered across the 33‑day, 75‑ day, and 96‑day maturities.
Demand was heavily concentrated on the 33‑day and 96‑day instruments, which recorded oversubscription rates of 3.4x and 4.6x respectively.
Stop rates remained relatively stable at 21.57%, 20.63%, and 20.45% across the three tenors, suggesting that the CBN continues to resist aggressive upward repricing of yields despite elevated inflation and persistent excess liquidity conditions.
This new week, the market is expected to remain highly liquid as OMO maturities worth N1.07 trillion are scheduled to hit the system.
Expectations of additional CBN liquidity mop‑ up auctions, may however moderate the impact of these inflows on market
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