T-Bills Market Bearish Amidst Significant Buoyant Liquidity

By Modupe Gbadeyanka

Treasury bills market remained broadly bearish on Monday despite the significantly buoyant level of system liquidity with yields trending higher across the curve.

According to Zedcrest Research, this came on the back of continued selloffs across the short and mid tenured bills, as market players anticipate higher stop rates at the forthcoming Primary Market Auction (PMA) for T-bills.

Most bids were set as high as 13 percent on the short and mid-tenured bills by market players.

During the market yesterday, the Central Bank of Nigeria (CBN) floated an OMO auction to manage the excessive system liquidity levels.

This was however met with an apathetic level of demand, with no bids on the 73 and 136 day issues, while market players bided as high as 13 percent for the 199-day issue, with a total subscription of N62.55 billion of the N200 billion offered.

The CBN could however sell only a total of N21.75 billion as it maintained its stop rate at 12.50 percent.

The aforementioned posits strong signals for higher rates in the T-bills market, and this trend is expected to persist, due to expected funding pressures on the part of the apex bank as it looks to raise a total of N136 billion T-bills at its forthcoming auction.

Meanwhile, the average money market rate opened the week on a high note on Monday, appreciating by 1.46 percent to close at 4.59 percent.

While the Open Buy Back (OBB) gained 1.34 percent to settle at 4.17 percent, the Overnight (OVN) rate went up by 1.58 percent to finish at 5 percent.

This came on the back of outflows for the CBN’s wholesale FX (N75 billion) and OMO interventions (N21.75 billion).

The net system liquidity is consequently estimated at 430 billion as at close of business yesterday and the rates are expected to remain moderated, barring a significant OMO sale by the CBN in subsequent sessions.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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