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LequteMan
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Yields on Nigerian bonds declined on Wednesday after the central bank slashed its cash reserve ratio by 6 percentage points to boost liquidity in the banking system but interest rates remained high at the interbank market, traders said.
Yields on Nigerian debt, which had risen to 17 percent after JP Morgan said two weeks ago it would to remove Nigerian bonds from a key emerging markets index by October, slipped below 15 percent.
The benchmark 2024 bond was quoted at 14.93 percent on Wednesday, down from 15.15 percent on Tuesday before the central bank's move. The 2020 paper was trading at 14.99 percent against 15.18 percent closed on Tuesday, while the longest tenor 2034 was quoted at 14.99 percent from 15.16 percent.
But at the same time overnight lending rates were quoted at between 30-50 percent from 15.5 percent the previous day, banking sources and traders said.
Traders said there was a liquidity deficit of about 110 billion naira on Wednesday but banks were holding off deals until an expected injection of cash when the new cash reserve requirement (CRR) would show its effect.
Nigeria's central bank kept its benchmark interest rate on hold at 13 percent on Tuesday but loosened monetary policy by cutting banks' cash reserve ratio to 25 percent to ease liquidity shortages.
The central bank had acted to ease liquidity shortages after authorities forced commercial banks to move government revenue to a Treasury Single Account (TSA) at the central bank, part of a drive to fight corruption.
Reuters
Yields on Nigerian debt, which had risen to 17 percent after JP Morgan said two weeks ago it would to remove Nigerian bonds from a key emerging markets index by October, slipped below 15 percent.
The benchmark 2024 bond was quoted at 14.93 percent on Wednesday, down from 15.15 percent on Tuesday before the central bank's move. The 2020 paper was trading at 14.99 percent against 15.18 percent closed on Tuesday, while the longest tenor 2034 was quoted at 14.99 percent from 15.16 percent.
But at the same time overnight lending rates were quoted at between 30-50 percent from 15.5 percent the previous day, banking sources and traders said.
Traders said there was a liquidity deficit of about 110 billion naira on Wednesday but banks were holding off deals until an expected injection of cash when the new cash reserve requirement (CRR) would show its effect.
Nigeria's central bank kept its benchmark interest rate on hold at 13 percent on Tuesday but loosened monetary policy by cutting banks' cash reserve ratio to 25 percent to ease liquidity shortages.
The central bank had acted to ease liquidity shortages after authorities forced commercial banks to move government revenue to a Treasury Single Account (TSA) at the central bank, part of a drive to fight corruption.
Reuters
