Monday, July 26, 2021

    WeekAhead: local OTC bond prices seen increase as traders bargain around stop rates

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    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    In the just concluded week, NITTY fell for most maturities tracked amid bullish sentiment.

    Notably, NITTY for 1 month, 3 months and 12 months maturities rose to 3.70% (from 3.81%), 5.03% (5.04%) and 9.71% (from 9.76%) respectively.

    However, NITTY for 6 months
    maturity rose to 6.89% (from 6.50%).

    Elsewhere, activity at the OMO space was
    muted as there were no auctions. CBN only
    repaid a total of N15 billion OMO bills which matured.

    Given the net inflow, NIBOR
    moderated for most tenor buckets. NIBOR for 1 month, 3 months and 6 months fell to 9.86% (from 11.09%), 11.28% (from 12.41%) and 13.45% (from 13.59%) respectively.

    However, overnight funds rate rose to 25.10% (from 17.73%).

    The standing lending facility totaling N91.58 billion, which was higher than the standing deposit facility totaling N41.74 billion, indicates that the financial system liquidity was boosted by lending from CBN.

    In the new week, we expect local OTC bond prices, especially at the longer end of the curve, to increase (and yields to moderate) as traders bargain around the stop rates.

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