Nigerian interbank rates fall on matured T-bills

LAGOS, June 7 Fri Jun 7, 2013 10:52am EDT

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LAGOS, June 7 (Reuters) - Nigerian interbank lending rates eased to an average of 10.25 percent on Friday, compared with The 12.31 percent average that they opened at, as the repayment of matured treasury bills by the central bank boosted liquidity.

Traders said about 206 billion naira ($1.30 billion) in matured treasury bills was repaid on Thursday, raising the volume of cash in the market and pushing down cost of borrowing among lenders.

"The central bank made attempt to mop-up the excess cash with the issuance of open market operations (OMO) debt note on Friday, with little success," one dealer said.

The opened with a cash balance of about 206 billion naira on Friday, traders said.

The secured Open Buy back (OBB), fell to 10.25 percent compared with 12.25 percent on Monday and 1.8 percentage points lower than the 12 percent central bank's benchmark interest rate.

Both overnight placement and call money also fell to 10.25 percent apiece, down from 12.25 percent and 12.5 percent at the start of the week, respectively.

Traders said cost of borrowing should inch up gradually next week as the central bank issues more OMO bills to reduce cash in the system in its bid to curb inflationary growth.

"We expect to see more OMO issuance next week and with the coming bond auction on Wednesday, the volume of cash will reduce and rate will definitely rise," another dealer said.

Nigeria plans to sell 85 billion naira ($535 million) in bonds ranging between five and 20 years at its sixth monthly debt auction of the year on June 12. [ID: nL5N0EJ1C0] ($1 = 158.9 naira) (Reporting by Oludare Mayowa; Editing by Tim Cocks)

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