Overnight inter-bank rate rises after CBN auctions N215.5bn T-bills
Overnight inter-bank rate rose by 0.50 percent to 4.25 percent on Thursday, from 3.75 percent after the Central Bank of Nigeria (CBN) auctioned the Nigerian Treasury Bills worth N215.5 billion on Wednesday.
The overnight rate, which is the rate at which banks borrow and lend to each other, increased to 4.25 percentage rate on Thursday compared with 3.75 percent recorded on Wednesday, data from FMDQ indicated.
The breakdown of the Tbills auctioned at the primary market shows that N136.5 billion was offered for 364 days tenor at the rate of 11.3 percent, and true yield of 12.73 percent. The instrument, which matures in August 1, 2019, was fully subscribed by 136.5 billion.
For 182 days tenor, the CBN offered N69.5 billion at 10.97 yield and 10.4 interest rate. The instrument was totally subscribed by 69.5 billion and will mature in January 31, 2019.
Also at the primary market, N9.5 billion was offered for 91 days tenor at the rate of 10 percent with 10.25 percent yield. The Treasury bill, which will mature in November 1, 2018, was completely subscribed.
The Buy Back, a money market instrument used to raise short-term capital, also went up by 0.42 percent to 3.33 percentage rate on Thursday from 2.29 percent on Wednesday.
In other jurisdiction, overnight the MSCI Asia Pacific Index slid 1.3 percent while Japan’s Topix index closed 1 percent lower as trade fears again rattled equities in the region, Bloomberg report.
Godwin Emefiele, governor of CBN, noted at the last Monetary Policy Committee (MPC) meeting in July that the average inter-bank call rate fell to 5.0 percent in June 2018, from 25.43 percent in May 2018, while the average Open Buy Back (OBB) rate decreased from 18.37 percent in May 2018 to 10.84 percent in June 2018.
The trend in market rates and the net liquidity position he said reflected the impact of the auction of Open Market Operations (OMO) bills, foreign exchange interventions, FAAC allocations to various levels of government, as well as the servicing of maturing CBN Bills.
The Treasury Bills market took a slightly bearish turn last week as average rate stood at 11.4 percent merely inching 6bps higher Week-on-Week. Short term bills advanced 20bps Week-on-Week to 11.0 percent on the back of sell trades on October bills while medium term instruments closed flat due to investors’ shift to OMO, offering higher yield.
On the flip side, buying interest on March 21, 19 (up 1.1% W-o-W) drove rates 10 bps lower at the long end of the curve according to analysts at Afrinvest Securities Limited.
Trading last week in the secondary market started off on a cautious note due to the MPC meeting outcome expectations as well as the unexpected OMO Auction conducted by the CBN last Tuesday mopping up N 235.9 billion inflows Bond coupon payments.
The CBN auctioned OMO on Thursday last week where it sold an additional N348.6 billion leaving liquidity level at negative N 75.9 billion as at close of market on Friday.
Naira on Thursday appreciated by 0.01 percent to close at N362.31k as against N362.33k traded the previous day at the investors and exporters forex window, data from FMDQ revealed.
At the Bureau De Change segment of the foreign exchange market and the black market the local currency appreciated to N359 per dollar compared to N361/$ it stood since a month ago.