Nigerian interbank lending rates crashed yesterday after the Central Bank of Nigeria (CBN) injected liquidity through the N420 billion bailout loan given to the five ‘troubled’ banks.
Call rates crashed from 19.3750% on Friday to close at 9.5833% yesterday, while the 7-day Nigeria Interbank Offered Rate (NIBOR) went down from 19.2500% to 10.8333%. Similarly, the 30-day NIBOR fell from 19.8333% to 12.3333%, while the 60-day NIBOR fell from 20.1250% to 13.0417%. Read the rest of this entry »
The Nigeria Interbank Offered Rate (NIBOR) may slump by as much as 13% this month following the decision yesterday, by the Central Bank of Nigeria (CBN), to guarantee loans between lenders, according to Standard Bank Group Ltd.
The Nigerian Interbank Offered Rate (NIBOR) will fall as government guarantees eliminate the risk of lending, forcing the rate “towards a convergence” with the 8% rate at which commercial banks borrow from the CBN, said Michael Hugman, a London-based strategist at Standard Bank. Nigeria’s three-month NIBOR was at 21.38% by 3:30 p.m. in the capital Lagos.
Central Bank of Nigeria (CBN) Governor Lamido Sanusi said yesterday that policy makers “would provide a temporary guarantee from July 8 to March 31, 2010,” to reduce counterparty credit risk and improve the efficiency of interbank lending, according to a statement on the CBN’s web site. “The guarantees offered by the central bank mean there is essentially no credit risk to the commercial banks, which will cause an arbitrage effect to drive down the interbank rate, until it converges with the central bank rate,” Hugman said in a telephone interview. “We would expect that to take place by the end of this month.” Read the rest of this entry »
