One-Year T-Bills Shed 0.08% as Money Market Rates Jump to 42.12%

By Dipo Olowookere

The treasury bills market started the week with mixed sentiment. This was because there were hikes on the yields on two tenors, while three yields experienced declines.

Specifically, the investors’ favourite at the secondary market yesterday, the one-year paper, was down by 0.08 percent yesterday.

Business Post observed that during trading on Monday, investors were slightly cautious as they look ahead to tomorrow’s primary market auction to be conducted by the Central Bank of Nigeria (CBN).

Also, funding pressures from a wholesale SMIS auction by the CBN kept most market players on the sidelines.

“In subsequent sessions, we expect yields to remain slightly elevated, as market players anticipate renewed supply of bills via the forthcoming PMA (Wednesday) and expected OMO auction (Thursday),” analysts at Zedcrest Research said.

Meanwhile, in line with expectations, the average money market rates broadly skyrocketed yesterday by 22.67 percent to settle for the day at 42.13 percent.

This was buoyed by the 20.75 percent increase recorded by the Open Buy Back (OBB) rate and the 24.58 percent rise in the Overnight (OVN) rate.

Business Post reports that while the OBB rate jumped to 39.92 percent from 19.17 percent, the OVN rate jumped to 44.33 percent from 19.75 percent.

It was gathered that the wide rise in the rates was caused by funding for the wholesale forex exchange (forex) auction by the CBN.

System liquidity was consequently estimated to have compressed to N30 billion from N105 billion opening the day.

The rates are expected to remain elevated as there are no significant inflows expected until Thursday, where N347 billion in OMO T-bills mature as well as N33 billion in coupon payments on the April 2037 FGN Bond.