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🇳🇬 Nigeria /Economy & Trade

FMDA: Nigerian Banks Set for N15.72 Trillion Liquidity Inflow in September

From ThisDay · () English

Translated from English and summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources Context piece
  • Nigeria’s banking system is expected to receive N15.72 trillion in liquidity inflows in September, up from an estimated N13.54 trillion in August.
  • Maturing OMO bills are projected to provide N11.60 trillion, while Treasury bills, FGN bond coupons and FAAC allocations will provide additional inflows.
  • The Financial Markets Dealers Association said the net impact will depend on the Central Bank of Nigeria’s sterilisation operations, meaning ample liquidity may not translate into cheaper funding.

Nigeria’s banking system is heading into September with a N15.72 trillion liquidity cushion, but the money may not remain there for long. The Financial Markets Dealers Association says maturing OMO bills will account for most of the expected inflows as banks enter the month with more cash available.

The projected inflow is 16.1 per cent higher than the N13.54 trillion estimated for August. OMO maturities alone are expected to contribute N11.60 trillion, or about 74 per cent of the total. Treasury bill maturities should add N1.255 trillion, while FGN bond coupons are expected to contribute N285.6 billion. FAAC allocations are estimated at N2.5 trillion, with the remainder coming from corporate bond and commercial paper maturities and coupons.

At N11.60 trillion, they account for about 74 per cent of the expected inflows.

· Financial Markets Dealers AssociationThe association described the expected contribution from maturing OMO bills.

The FMDA said the final effect on system liquidity will depend on the Central Bank of Nigeria’s sterilisation stance. The central bank continues to use OMO operations to manage excess liquidity, so the headline inflow will not necessarily translate into a broad easing of money-market conditions.

Treasury bills maturities are expected to add N1.255 trillion, while FGN bond coupons will contribute N285.6 billion. FAAC allocations are estimated at N2.5 trillion, with the balance coming from corporate bonds and commercial paper maturities and coupons.

· Financial Markets Dealers AssociationThe association detailed the other expected sources of September liquidity.

That tension was already visible in August. System liquidity rose 56.17 per cent, from N2.98 trillion to N4.65 trillion, as inflows from maturing securities, FAAC allocations and other repayments exceeded the CBN’s liquidity mop-up operations. Yet Treasury bill yields rose by 73 basis points to an average of 19.21 per cent, while the average FGN bond yield fell 14 basis points to 16.92 per cent.

Investor demand remained strong. Treasury bill bid-to-cover increased to 5.86 times from 4.34 times in July, while OMO bid-to-cover rose to 4.62 times from 3.99 times. The FMDA said reopening OMO auctions to domestic investors pushed stop rates below 20 per cent. For banks, the immediate picture is ample liquidity, but not necessarily cheap money.

Strong investor demand across instruments supported market activity in August.

· Financial Markets Dealers AssociationThe association assessed investor activity during August.
About this summary

Originally published by ThisDay in English. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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