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T-Bills Yields Tick Higher as CBN Mops up N553b

By Dipo Olowookere

The Central Bank of Nigeria (CBN) resumed the sale of treasury bills via Open Market Operations (OMO) on Thursday after earlier putting the exercise on hold for days.

At the market yesterday, the appetite of investors for the instrument, especially for the one-year tenor, was visible, resulting in the bills being oversubscribed.

The apex bank had offered OMO bills worth N400 billion to market players, but a total subscription valued at N552.99 billion.

During the exercise, the central bank offered N100 billion worth of the 182-day bill to market players, but received subscriptions worth N80.62 billion, which it eventually sold with the rate cleared at 12.50 percent.

Also, N300 billion worth of the 364-day paper was offered to investors with subscriptions valued at N472.37 billion received and eventually sold by the CBN at 13.50 percent.

The amount raised by the central bank was enough to soak excess inflows from N268 billion maturing bills yesterday.

Business Post reports that the 12.50 percent rate for the 182-day note and 13.50 percent for the 364-day bill were higher than what were offered during the previous day’s primary market auction by the bank.

During the PMA held on Wednesday, the 182-day bill was offered at 12.10 percent, while the 364-day instrument went for 13.33 percent.

However, there are expectations that the yields will “close the week on a relatively calm note, with buying interests relatively quietened by the significant OMO sale yesterday,” according to analysts at Zedcrest Research.

Meanwhile, the Open Buy Back (OBB) and Overnight (OVN) rates shot above single digits to close on Thursday at 11.67 percent and 12.58 percent respectively as the CBN mopped up N553 billion off system liquidity via an OMO sale.

System Liquidity was consequently estimated at N120 billion positive, with inflows form OMO maturities, N268 billion, providing some cushion for rates in the market.

The rates are expected rates to remain relatively unchanged on Friday as there are no significant outflows expected.

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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