Selloffs Dominate T-Bills Market as Funding Rates Spike

By Dipo Olowookere

On Monday, the treasury bills market closed bearish as selling pressure dominated the market, Business Post is reporting.

As a result, the market, at the wrap of activities, closed bearish with the average rates trending higher by 0.09 percent.

This is as market players look forward to the sale of the government securities tomorrow by the Central Bank of Nigeria (CBN).

Analysts at Zedcrest Research noted that there were sell-offs witnessed across the curve especially on the February 2019 maturities offered at the recent OMO auctions.

“We expect bearish sentiments to persist over the rest of the week due to anticipated system liquidity decline coming from FGN bond auction, OMO auctions and Retail FX funding,” they said in their daily report.

Meanwhile, the funding rates trended higher on Monday from what was recorded in the last trading session.

This was as a result of the decline in system liquidity as authorized dealers funded for bids at the weekly CBN Wholesale FX Sales interventions.

Business Post reports that the Open Buy Back (OBB) rate increased to 11.45 percent from 8.42 percent, while the Overnight (OVN) rate jumped to 12.42 percent from 9.25 percent.

The funding rates are expected to “oscillate in tandem with system liquidity.”

“Inflows via OMO T-bills maturities of N440 billion is expected to be offset by another OMO session by the CBN on Thursday.

“Anticipated FGN Bond Auction and Retail FX funding will also put pressure on funding rates later this week,” Zedcrest Research said.