T-Bills Market Trades Bullish as Overnight Rate Falls to 45.50%

By Dipo Olowookere

Treasury bills worth N14.4 billion were sold to investors on Friday by the Central Bank of Nigeria (CBN) via the Open Market Operations (OMO).

This was less than 50 percent of the total amount of the T-bills the apex bank offered for sale yesterday.

The central bank had offered to auction a total N30 billion worth of the government instrument to market players.

Business Post reports that N3.12 billion worth of the 111-day bill was sold by the CBN on Friday at 12.60 percent, while N11.24 billion worth of the 251-day bill was allotted to investors at the stop rate of 14.40 percent.

But generally, the T-Bills market was slightly bullish note yesterday as market players cherry picked some high yielding bills in anticipation of inflows from retail FX refunds expected on Monday.

According to analysts at Zedcrest Capital, the average T-bill yields is expected to remain slightly elevated above 15 percent due to the tight system liquidity and continued OMO interventions by the CBN.

Meanwhile, the Open Buy Back (OBB) and overnight rates declined slightly to 43.33 percent and 45.50 percent, as banks were less aggressive in their OMO auction demand whilst also anticipating inflows from retail FX refunds.

System liquidity is estimated to close at N33 billion long, following debits for yesterday’s OMO auction.

The rates are expected to decline slightly on Monday, with inflows from retail FX refunds expected to ease funding pressures, barring a significant OMO T-bill sale by the CBN.