Money market rates rose significantly despite the fact that inflows from matured FGN Sukuk impacted the financial sector. Transactions remained restricted due to the market’s desire to allocate financing effectively among major players.
According to AIICO Capital Limited, opening system liquidity rose on Thursday as a result of inflows from the FGN Sukuk 2024 maturity. According to Cordros Capital Limited, FGN bond coupon payments resulted in N335.78 billion in inflows into the financial system.
Even with this, interbank rates closed higher as outflows for OMO auction sales during the day by the Central Bank of Nigeria (CBN) weighed on liquidity level in the financial system. The CBN offered ₦500 billion across 96-day, 194-day, and 362-day papers at the primary market auction conducted to drive inflows from foreign portfolio investors into the market.
However, demand was weak, with offers totaling ₦252.90 billion only seen for the longest-dated instrument. Analysts at CardinalStone Securities Limited said this resulted in a bid-to-offer ratio of 0.51x, with the stop rate settling at 24.36%.
In a note, Cowry Asset Limited said the Nigerian interbank offered rate (NIBOR) increased across all maturities, signaling liquidity strain in the financial system on Thursday. Data from the FMDQ platform confirmed that the open repo rate (OPR) and the overnight rate (O/N) increased by 169 bps and 172 bps to 21.97% and 22.67%, respectively.
“We expect the interbank rates to be elevated tomorrow due to the recent OMO auction sale, though the anticipated FGN coupons should support system liquidity,” AIICO Capital Limited said in a note.
