Liquidity in Nigeria’s money market experienced a substantial 62.3 percent surge last week, reaching N2.2 trillion, according to a recent report by Afrinvest. The increase was largely driven by enhanced access to funds by banks, which recorded a significant 76.4 percent week-on-week growth.
Despite the influx of liquidity, the open repo rate remained unchanged at 32.4 percent, while the overnight rate saw a marginal dip of 10 basis points, settling at 32.9 percent.
Treasury Bills Auction Performance At the most recent primary market auction, the Central Bank of Nigeria (CBN) offered treasury bills worth N800 billion across three tenors: 91-day, 182-day, and 364-day. However, investor appetite weakened as the bid-to-offer ratio dropped from 2.3 times in the previous auction to 1.1 times.
Among the tenors, the 364-day bill attracted the highest investor interest, recording a bid-to-cover ratio of 1.9 times. Meanwhile, the 91-day and 182-day instruments had bid-to-cover ratios of 1.0 times and 1.1 times, respectively.
Compared to the last auction, stop rates for all tenors climbed, with the 91-day bill increasing by 100 basis points to 18.0 percent, the 182-day bill rising by 70 basis points to 18.5 percent, and the 364-day bill jumping by 150 basis points to 19.9 percent.
Secondary Market Trends The secondary market saw a shift from the previous week’s bearish sentiment, leading to a decline in average yields by 40 basis points week-on-week to 19.4 percent. Notably, mid- and long-term instruments experienced price gains, with average yields decreasing by 16 basis points and nine basis points, closing at 19.0 percent and 21.6 percent, respectively. Conversely, short-term instruments faced selling pressure, resulting in an average yield increase of 13 basis points to 17.6 percent.
Market Outlook for the Coming Week Looking ahead, Afrinvest projects that market sentiment will be shaped by the maturity of N1.2 trillion worth of treasury bills and the issuance of N700 billion in new primary market instruments. Investors will be closely watching these dynamics to gauge the liquidity impact and yield trajectory in the short term.
