Stop Rates Increase as Investors Demand for Higher Rates…

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In the just concluded week, CBN refinanced
matured treasury bills worth N169.78 billion in the primary market as stop rates further closed higher for all maturities.

Stop rates for 91-Day, 182-Day and 364-Day rose to 1.00% (from 0.55%), 2.00% (from 1.3%) and 4.00% (from 2.00%) respectively.

The increase in stop rates for two consecutive auctions and spike in OMO rates last week was a clue to market
participants about a northward shift in interest rate; hence, NITTY rose for all maturities tracked as investors sold off to shop for higher rates.

Yield for 1 month, 3 months, 6 months and 12 months maturities rose to 0.95% (from 0.46%), 1.10% (from 0.46%), 1.94% (from 0.99%) and 2.56% (from 1.72%) respectively.

On the other hand, CBN sold OMO bills worth N169.00 billion out of the matured N200.76 billion bills. Despite the net matured bills worth N31.76, we saw NIBOR for 3 month, 6 months and 12 months climb to 2.05% (from 1.26%), 2.40% (from 1.19%) and 4.03% (from 1.75%) respectively.

However, overnight rate moderated to 4.92% (from 13.50%).

In the new week, treasury bills worth N260.21 billion will mature via OMO, hence we expect interbank rates to ease further amid anticipated boost in financial system liquidity.

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