T-Bills Yields Spike by 1% as CBN Releases No-Sale OMO Result

By Dipo Olowookere

Treasury bills yields increased on Thursday by one percent as market players repriced quotes in reaction to developments at the previous day’s auction.

According to analysts at Zedcrest Research, trading activities were however relatively muted as investors cautiously anticipated results from the Central Bank of Nigeria (CBN) OMO auction, which were not released until close of trading.

With most players placing bids at about 13 percent at the day’s auction, the CBN issued a No-Sale OMO result.

This is expected to slightly moderate bearish market sentiments, with trading activities expected to remain relatively constrained to the short end of the curve as market players seek for more clarity on the CBN action with respect to its clearing rates for OMO auctions.

Business Post reports that during yesterday’s OMO, the apex bank offered T-bills worth N400 billion comprising the 77-day and 203-day bills to investors, but it got subscriptions worth N64.17 billion for the former and N100.03 billion for the latter.

Meanwhile, a look at the money market showed a slight hike in the average rates by 0.09 percent on Thursday.

While the Open Buy Back (OBB) rate appreciated by 0.09 percent to close at 10.67 percent, the Overnight rate reduced by 0.08 percent to settle at 11.67 percent.

With inflows from OMO maturities and retail forex refunds yesterday, system liquidity is estimated to have improved to N400 billion from N100 billion previously.

Barring a further OMO auction, the rates are expected to remain relatively stable with the rise in system liquidity expected to support outflows for retail forex funding by banks today.