Interbank Rates Cool: Bond Inflow Effect
FGN Coupon Payments Inject Liquidity, Reversing Earlier Rate Spike
Interbank rates eased sharply as inflows from Federal Government of Nigeria (FGN) bond coupon payments lifted liquidity levels in the financial system.
Reversing the previous trend, the money market actors have seen strong withdrawal from the Central Bank of Nigeria (CBN) standing deposit facility this week. In the absence of substantial inflow that could match the related outflows, rates had surged near 29%.
The CBN has been debiting banks for US dollars sold as part of forex market intervention sales, though there have been no primary market auctions that could pose additional threats to the funding profile.
Yesterday, interbank liquidity improved significantly following ₦175 billion in FGN bond coupon payments and additional CBN inflows, driving rates lower to about the 26.5% level.
The Nigerian Interbank Offered Rate (NIBOR) rose across all tenors, except for the overnight rate, which declined to 27.13%, reflecting liquidity adjustment seen in the money market.
Meanwhile, key money market indicators also moved lower, with the Open Repo Rate falling by 1.65 percentage points to 26.85% and the Overnight Lending Rate dropping by 2.02 percentage points to 27.40%.
The Nigerian Interbank Treasury Bills True Yield (NITTY) declined across all maturities, while the average T-bill yield remained unchanged at 20.93%. Interbank Rates Ease as Bond Coupon Payment Boosts Liquidity.
Credit, Market Force Africa: Texts excluding Headlines.
