N2.2trn NTB maturities repayment boost system liquidity to N2.78TRN

• As CBN’s OMO/ T-bills Auctions Barrage Reprices Curve

BY BONNY AMADI

Nigerian System liquidity improved to a net surplus position of N2.78 trillion, representing a 31.94% week-on-week increase from the prior week’s N2.11 trillion.

This improvement was driven primarily by the repayment of N2.2 trillion in NTB maturities, which more than offset liquidity debits arising from N1.06 trillion in Wednesday’s NTB auction sales and N1.3 trillion in OMO bill settlements earlier in the week.

Notwithstanding the headline surplus, the cumulative liquidity withdrawals from two CBN auctions which was estimated at nearly N4.0 trillion, tightened interbank conditions and triggered an uptick in funding rates. Reflecting these liquidity pressures, NIBOR rose across all tenors.

The overnight NIBOR increased by 2bps to 22.84% at the close of the week, while the 1-month, 3-month, and 6-month tenors also recorded increases. Consequently, funding conditions remained elevated, with the overnight funding rate rising by 10bps to 22.79%, while the Open Repo rate remained unchanged at 22.50%.

NITTY yields were broadly higher across the curve, although the 1-month NITTY declined by 6bps to 16.64%. In contrast, the 3-month, 6-month, and 12-month NITTY tenors trended upward, reflecting investor repositioning following the outcome of Wednesday’s primary market auction.

Meanwhile, the secondary market for treasury bills traded on a bearish note, with selective sell-offs across maturities. As a result, the average secondary market yield rose by 37bps week-on-week to 18.50%.

At last midweek’s NTB primary auction, the CBN offered N1.15 trillion across the standard tenors. Total subscriptions printed at N3.4 trillion, underscoring strong investor appetite, with approximately 98% of bids concentrated in the 364-day tenor.

Ultimately, the CBN allotted N1.1 trillion, translating to a bid-to-cover ratio of 3.24x and a sales-to-offer ratio of 0.92x. Stop rates on the 91-day and 182-day bills increased by 4bps and 15bps to 15.84% and 15.65%, respectively, while the 364-day stop rate eased marginally to 18.36% from 18.47% at the previous auction.

Earlier in the week, the CBN conducted an OMO bills auction on Monday, which also recorded robust investor participation. The apex bank offered N600 billion across the 203-day and 245-day maturities, while total subscriptions reached N2.9 trillion, resulting in a final allotment of N2.6 trillion. Stop rates settled at 19.38% for the 203-day bill and 19.39% for the 245-day bill.

In the new week, it is expected that rates are likely to trend marginally lower, supported by a positive system liquidity outlook. Liquidity conditions are expected to be bolstered by an estimated N900 billion in OMO bill maturities alongside anticipated December.