Average T-Bills Yield Settles at 13.89% as CBN Issues ‘No Sale’ OMO

By Dipo Olowookere

The treasury bills space was bearish on Thursday with the corresponding average yield trending higher by 0.24 percent to settle at 13.89 percent.

It was observed that the yields on all tenors settled higher, especially the one-month and 3-month tenors, which advanced by 0.33 percent and 0.32 percent respectively.

This was mainly due to the selloff across the curve as a result of the hot demand for the 364-day bill, which is now being bided above the 14 percent mark.

At the PMA on Wednesday, the paper went for 13.50 percent and when the Central Bank of Nigeria (CBN) offered the same bill at Thursday OMO session, market players wanted the stop rates above 14 percent, forcing the apex bank to issue a ‘No Sale’ result at the end of the auction.

A total of N350 billion OMO bills were on offer yesterday, but the CBN received subscriptions worth N109.03 billion from investors.

Business Post reports that the bank got N2.55 billion worth of the N50 billion 119-day bill, N6.12 billion worth of the N100 billion 189-day bills and N100.36 billion worth of the N200 billion 364-day bills at the OMO auction on Thursday.

The apex bank is likely to conduct another OMO today with investors still expected to maintain high bids at the exercise, with yields anticipated to stay high in the secondary market.

Meanwhile, the average money market rate rose to 8.63 percent on Thursday, following the 2 percent and 1.67 percent increase in both the Open Buy Back (OBB) and Overnight (OVN) rates respectively.

While the OBB rate closed at 10.33 percent yesterday from 8.33 percent in the previous session, the OVN rate settled at 11.08 percent versus 8.92 percent it settled the previous day.

This followed a decline of N300 billion in system liquidity week-to-date as published by the CBN.

This was mostly due to interventions by the CBN to stabilize rates within the FX market. System liquidity is however expected to have rebounded to N500 billion as at close of business on Thursday, coming on the back of inflows from OMO T-bill maturities and Retail FX refunds.

“We however expect rates to remain pressured due to expected outflows for another retail FX auction and a likely OMO intervention by the CBN,” analysts at Zedcrest Research said.