Liquidity Shortage Keeps Inter-bank Rate at 15%

The Nigerian financial system is still facing liquidity pressures as the average interbank rate remains at 15% while market participants continue to price interest rate hikes into transactions.

Due to squeezed liquidity position, money market rates adjusted upward amidst increased interest rates on savings deposits held by Nigerian banks.

Central Bank of Nigeria’s debit on the local banks for failing to meet its 65% cash reserve ratio has become an impediment to liquidity as banks continually pay visits to the apex bank standing lending facility to access funds.

At the close of business, the overnight lending rate settled at 15.0% while the financial system liquidity net short position was N150.49 billion, Cordros Capital said in a note.

Elsewhere, the Nigerian Treasury bills secondary market traded cold as the average yield was unchanged at 7.9%. Similarly, the average yield was unchanged at 11.1% in the open market operation (OMO bills) segment.

Investors’ interest in Nigerian naira denominated assets continues to drop as Debt Management Office was unable to raise its offering in the primary market for the Federal Government of Nigeria reopening bonds earlier this week.

A slew of fixed income traders told MarketForces Africa that the under subscription seen in the primary market was driven by weaker liquidity.  This drill down towards the secondary market for trading existing instruments amidst yield repricing.

In the market, trading activities on FGN Bonds ended in mixed, although with a bearish tilt, as the average yield inched higher by a basis point to 12.7%. READ: FX Inflows into Nigeria Sinks Amidst Dollar Shortage

Across the benchmark curve, Cordros Capital note indicated that the average yield expanded at the short (+3bps) and mid (+2bps) segments, following profit-taking on the JAN-2026 (+14bps) and APR-2029 (3bps) bonds, respectively. Conversely, the average yield was flat at the long end. #Liquidity Shortage Keeps Interbank Rate at 15%

The Nigerian financial system is still facing liquidity pressures as the average interbank rate remains at 15% while market participants continue to price interest rate hikes into transactions.

Due to squeezed liquidity position, money market rates adjusted upward amidst increased interest rates on savings deposits held by Nigerian banks.

Central Bank of Nigeria’s debit on the local banks for failing to meet its 65% cash reserve ratio has become an impediment to liquidity as banks continually pay visits to the apex bank standing lending facility to access funds.

At the close of business, the overnight lending rate settled at 15.0% while the financial system liquidity net short position was N150.49 billion, Cordros Capital said in a note.

Elsewhere, the Nigerian Treasury bills secondary market traded cold as the average yield was unchanged at 7.9%. Similarly, the average yield was unchanged at 11.1% in the open market operation (OMO bills) segment.

Investors’ interest in Nigerian naira denominated assets continues to drop as Debt Management Office was unable to raise its offering in the primary market for the Federal Government of Nigeria reopening bonds earlier this week.

A slew of fixed income traders told MarketForces Africa that the under subscription seen in the primary market was driven by weaker liquidity.  This drill down towards the secondary market for trading existing instruments amidst yield repricing.

In the market, trading activities on FGN Bonds ended in mixed, although with a bearish tilt, as the average yield inched higher by a basis point to 12.7%. READ: FX Inflows into Nigeria Sinks Amidst Dollar Shortage

Across the benchmark curve, Cordros Capital note indicated that the average yield expanded at the short (+3bps) and mid (+2bps) segments, following profit-taking on the JAN-2026 (+14bps) and APR-2029 (3bps) bonds, respectively. Conversely, the average yield was flat at the long end. #Liquidity Shortage Keeps Inter-bank Rate at 15%