T-Bills Yields Further Lose 0.35% as CBN Raises N171b from OMO Sale

By Dipo Olowookere

At the treasury bills market on Tuesday, it was another bullish moment with yields depreciating for the second consecutive trading session.

At the close of business yesterday, the T-bills yields further compressed by 0.35 percent as market players continue to invest excess liquidity in the secondary market, according to Zedcrest Research, a Lagos-based investment company.

During Tuesday’s session, the Central Bank of Nigeria (CBN) floated an OMO auction, offering a total of N600 billion over two maturities, but sold N171.3 billion.

A breakdown of the exercise by Business Post showed that of the N100 billion worth of the 72-day bills offered, the apex bank sold N81.44 billion at 11.05 percent after receiving subscriptions worth N83.16 billion.

Also, from the N500 billion worth of the 198-day bills, the central bank received subscriptions valued at N184.22 billion, selling N89.83 billion at 12.15 percent.

Despite the weak demand at the auction, the apex bank defied expectations for an increase and maintained stop rates at the above levels.

With OMO maturities expected later in the week, the CBN is likely to float another auction to manage system liquidity.

Market participants are expected to remain active at the short-end of the curve as investors continue to test the CBN’s resolve to keep rates stable at subsequent OMO auctions.

Meanwhile, at the money market yesterday, the average rate declined by 1.42 percent to settle at 3.50 percent, on the back of respective declines of the Open Buy Back (OBB) and Overnight (OVN) rates.

While the OBB rate dropped to 3.08 percent from 4.42 percent on Monday, the OVN rate went down to 3.92 percent from 5.42 percent.

The rates are expected to remain relatively stable due to the significantly buoyant level of system liquidity.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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