Inflow Drought Expands OVN Lending Rate To 21.5%
ISMAIL MUSA
The overnight lending rate (OVN) on Tuesday expanded by 50bps to 21.5 per cent, driven by the absence of any significant inflows into the system liquidity.
Meanwhile, on Monday, the overnight lending rate contracted by 250bps to 21.0 per cent, amid the still thin system liquidity.
The currency market transaction showed that the naira closed flat Tuesday at the I&E window and parallel market at NGN386.50/USD and NGN461.00/USD, respectively, having earlier on Monday weakened at the Investment and Export (I&E) window by 0.1 per cent to NGN386.50/USD while it closed was flat at the parallel market at NGN461.00/USD.
In the money market and fixed income market segment, the NTB secondary market was bearish, as average yield expanded by 6bps to 2.1 per cent.
Across the curve, the second trading session of the week showed that yields pared at the short (-1bp) end, due to demand for the 9DTM (-3bps) instrument, while they expanded at the mid-segment by 16bps and long segment by +5bps, following sell-offs of the 100DTM instrument which expanded by 20bps and 205DTM instrument by +10bps, respectively. Similarly, average yield expanded by 12bps to 5.2 per cent at the OMO secondary market.
Trading in the Treasury bond secondary market was bullish, as average yield contracted by 12bps to 7.9%. Across the curve, yield contracted at the short (-38bps) end, as investors demanded the APR-2023 (-131bps) bond, while they expanded at the long (+6bps) end following sell-offs of the MAR-2036 (+15bps) bond; yield at the mid segment was flat.
On Monday, activities in the Nigerian Treasury Bill (NTB) secondary market were mixed, as average yield pared by 1bp to 2.1per cent per cent. Across the curve, yields expanded slightly at the short (+1bp) end, following sell-off of the 87DTM (+5bps) instrument, while they contracted at the long (-4bps) end, due to demand for the 220DTM (-15bps) instrument; yield at the mid segment was flat. Elsewhere, average yield expanded by 3bps to 5.2% at the OMO secondary market.
Trading in the Treasury bond secondary market was bullish, as average yield contracted by 4bps to 8.0 per cent.
Across the curve, yield contracted at the short (-9bps) and mid (-1bp) segments, driven by demand for the JAN-2022 (-31bps), and APR-2029 (-1bp) bonds, respectively; yield at the long end was flat.
The overnight (OVN) rate jumped by 740bps w/w, to 23.5% as outflows from CRR and OMO auction (NGN100.00 billion) debits outweighed the inflows from OMO maturities (NGN333.31 billion) and retail FX refunds
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