Nigeria’s N51bn matured treasury bills may moderate interbank rates this week
The maturity of over N51 billion treasury bills under the open market operations (OMO) at the weekend may bring moderation to interbank rates this week, according to money market traders.
The OMO bills are expected to lead to an improvement in financial system liquidity and resultant moderation in interbank rates.
Available data showed that the maturities would come through 143-day bills worth N27.97 billion; 177-day bills worth N8.04 billion; and 181-day bills worth N15.13 billion.
“We expect improvement in financial system liquidity and resultant moderation in interbank rates,” a dealer told businessamlive at the weekend.
The Central Bank of Nigeria (CBN) conducted a Primary Market Auction last Wednesday in which N26.1 billion, N11.0 billion and N80.0 billion of the 91-day, 182-day and 364-day instruments were offered at respective stop rates of 13.4 per cent, 17.1 per cent and 18.7 per cent.
Dealers said all instruments were oversubscribed, with the CBN allotting the exact amount that was on offer at the auction.
Meanwhile, some stakeholders in the economy have raised concerns that the high returns on treasury bills and Federal Government bonds are having negative effects on productive activities in the country.
Muda Yusuf, Director General of the LCCI said the high yield regime of between 15 and 18 percent is having negative impact on productive activities as it discourages both lenders and investors from putting their money in productive activities considering the risks and challenges of the operative business environment.
Muda disclosed this at a News Agency of Nigeria (NAN) forum recently on the mid-term assessment of the present administration. He said that many investors now prefer investing in treasury bills and bonds because they were not risky, tax free and with high returns.
According to him, commercial banks that are supposed to be lending to the manufacturers are also investing in treasury bills. He, therefore, advised promoters of small and medium enterprises (SMEs) to make their businesses more attractive to compete favourable for bank loans.
To this end, banks in Nigeria have a reduced incentive to lend to the private sector because of the favourable interest on government securities.
By Niyi Jacobs, Business a.m. live staff