Money Market Rates Subdue as Liquidity Improves

Money market rates have been projected to remain subdued as liquidity position in the financial system improves with open market operation (OMO) repayment, FSDH Capital said in a note.

The average interbank rate declined as both overnight and open buy back rates dropped off due to better liquidity in the financial system yesterday, market data shows.

On its trading platform, FMDQ Exchange showed that the overnight lending rate decreased by 5.75 per cent to close at 2.25 per cent as against the last close of 8.00 per cent. Also, the Open Repo rate decreased by 5.50 per cent to close at 2.00 per cent compared to 7.50 per cent on the previous day, according to analysts notes.

“As system liquidity has improved with OMO repayment of ₦102.225 billion, the money market rates are likely to remain subdued, barring any mop-up activity by the Central Bank”, FSDH Capital stated.

In the treasury bills secondary market, trading activities closed on a flat note with the average yield across the curve remaining unchanged at 4.48 per cent.

Average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.68 per cent, 4.05 per cent, and 5.40 per cent, respectively. In the OMO bills market, the average yield across the curve closed flat at 5.68 per cent, according to a market note from FSDH Capital.

The average yields across short-term and long-term maturities remained unchanged at 5.42 per cent and 5.81 per cent, respectively. Amidst quiet trading, the Federal Government of Nigeria (FGN) bonds secondary market closed flattish as the average bond yield across the curve closed flat at 11.53 per cent.

Average yield across the short tenor of the curve expanded by 1 basis point, according to traders’ market report reviewed by MarketForces Africa. However, the average yields across medium tenor and long tenor of the curve remained unchanged.

The 14-MAR-2024 maturity bond was the best performer with a decrease in the yield of 1 basis point, while the 27-APR-2023 maturity bond was the worst performer with an increase in the yield of 4 basis points. Nigerian Exchange Limited has listed the Federal Government of Nigeria’s $4 billion Eurobonds on January 31.

The Eurobonds were issued in three tranches: 7-years $1.25 billion at 6.125 per cent p.a., 12-years $1.5 billion at 7.375 per cent p.a., and 30-years $1.25 billion at 8.250 per cent p.a., as part of the fund-raising for the implementation of the 2021 Appropriation Act.

The bonds were issued via the Debt Management Office with Chapel Hill Denham Advisory Limited acting as Domestic Book runner and FSDH Merchant Bank Limited as Financial Adviser.