By Nigerian deposit money banks increased their treasury buying as the liquidity level in the financial system improved. However, fund managers and local lenders’ demand for short-dated instruments triggered lower spot rates pricing midweek at the Central Bank auction.
Post-auction, unmet bids at yesterday’s Nigerian Treasury bills auction joined forces with excess liquidity in the system to spur considerable buy-side activities across the benchmark curve, TrustBanc Capital told investors in a note.
Local banks looking to sterilize idle funds against cash reserve requirement (CRR) hammer also bought significantly, according to fixed income securities market traders.
TrustBanc Capital told investors that bids were especially concentrated on the far corner of the curve, as Mar-24 and Apr-24 bills shed 105 and 126 basis points, respectively.
Consequent to the bullish moves, the average yield on benchmark bills slid south by 27 basis points to 6.52% in the absence of funding pressures in the system.
System liquidity improved further by 4.9% to close at ₦756.77 billion on Thursday, buoyed by a strong opening balance, following the inflow of Fx Swap maturities the previous day.
Accordingly, inter-bank rates closed at market floor levels of 11.00% and 11.38%, respectively. The three-month Nigerian interbank offer rate (NIBOR) rate further increased by 98 basis points to close at 13.55%.
Cash reserve requirement and secondary market intervention auction settlement debits are expected to impact the closing figures significantly on Friday.
However, TrustBanc Capital analysts believe the apex bank will leave enough balance to provoke oversubscription at the FGN bond auction scheduled for Monday.
Elsewhere, the bears consolidated their hold on the Lagos bourse, as profit-taking in Banking tickers pulled the All-share index down by 9 basis points.
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