Nigeria not trading as banks pay for bonds

folarin okunola

September 21, 2015 1:23 PM

Nigeria sold the naira-denominated bonds maturing in 2020 and 2034 at an auction on Wednesday, and payment was due to be effected on Friday.

A woman takes Nigerian Naira from a bank's automated teller machine (ATM) in Ikeja district in the commercial capital Lagos November 12, 2014. REUTERS/Akintunde Akinleye

Nigeria's interbank money market halted trading for the fourth consecutive day on Friday as commercial lenders made provision to pay for 45 billion naira of bonds auctioned on Wednesday, draining cash from the banking system.

"All we have is indicative quotes of between 15-20 percent for Open Buy-Back (OBB) and overnight lending, no trading is taking place for now," one dealer said.

There were some deals done at 15 percent on overnight placement late on Thursday, traders said.

READ: BoI to invest N2 billion in Nigerian movie industry

Liquidity in the interbank money market has shrunk this week, since the government directed commercial lenders to transfer government revenues to a single account with the central bank as part of a drive to fight corruption and aid transparency.

Cash balances held with the central bank by commercial lenders further dropped to 161 billion naira on Friday from 173 billion naira credit on Thursday, and were likely to decline further after payment for the bond purchases, traders said.

folarin okunola