Nigeria’s interbank money market recorded mixed movements in key rates after liquidity conditions tightened following debits for Nigerian Treasury Bills (NTB) allotments at the midweek primary auction.
Financial market data sourced from an investment banking firm showed that aggregate liquidity in the banking system declined significantly as the Central Bank processed settlements for newly issued Treasury bills. The system’s net long liquidity position fell to approximately ₦1.88 trillion.
This marked a substantial contraction from the ₦3.02 trillion balance reported the previous day, reflecting a liquidity squeeze driven by auction-related debits totaling ₦1.91 trillion.
Although the system recorded inflows from maturing Treasury bill instruments valued at ₦765.88 billion, those inflows were insufficient to offset the outflows generated by the latest NTB issuance.
Funding Rates React to Liquidity Adjustment
As liquidity moderated, funding costs reacted unevenly across segments of the money market.
The overnight (O/N) rate advanced by 3 basis points to close at 22.86 percent, indicating slightly tighter funding conditions among banks. Meanwhile, the Open Repo Rate (OPR) remained unchanged at 22.50 percent, suggesting relative stability in short-term liquidity borrowing through repo arrangements.
In the interbank space, the Nigerian Interbank Offered Rates (NIBOR) reflected mixed sentiment. The overnight NIBOR climbed 7 basis points to 22.84 percent, further signaling system tightness.
Across other tenors:
- The three-month rate rose by 8 basis points
- The six-month tenor declined by 3 basis points
- The one-month maturity remained unchanged
Cowry Asset Limited attributed the divergent rate movement to the uneven distribution of liquidity across banks.
Secondary Market Turns Bullish
Despite tighter liquidity, the secondary Treasury bills market closed on a positive note. Analysts observed renewed buying interest, largely attributed to unmet subscription demand at the primary auction.
Average benchmark NTB yields declined by 18 basis points to 17.33 percent, reflecting stronger demand for short-term government securities.
Similarly, the secondary market for Open Market Operation (OMO) bills exhibited bullish undertones. The average benchmark yield edged down by 1 basis point to close at 20.55 percent.
Market participants noted that institutional investors appeared to take advantage of attractive yield levels, particularly after liquidity adjustments from the primary auction settlement.
