By Dipo Olowookere
Ahead of the anticipated sale of treasury bills via the Open Market Operations (OMO) by the Central Bank of Nigeria (CBN) on Thursday (today), the average yields of the debt instrument went up at the secondary market on Wednesday (yesterday).
This came as market players remained under pressure from the relatively tight level of system liquidity, according to Zedcrest Research.
It was observed that the expectation for a further OMO auction by the CBN today forced slight selloff on the longer end of the curve.
At the close of business yesterday, the T-bills market was slightly bearish, with the average yields ticking higher by 0.13bps.
“We expect yields to remain elevated due to expectations for the OMO auction tomorrow, and for a further tightening of system liquidity via a retail FX auction and bond auction settlement on Friday,” analysts at Zedcrest said.
Meanwhile, in line with expectations, the average money market rates remained high at the market yesterday.
At the close of transactions, the average money market rate advanced by 1.55 percent to settle at 16.94 percent.
Specifically, the Open Buy Back (OBB) and Overnight (OVN) rates increased by 1.42 percent and 1.67 percent respectively to close at 17.21 percent and 16.67 percent respectively.
The rise came as system liquidity remained relatively depressed at N62 billion positive and despite the N284 billion expected inflows from OMO maturities today, rates are expected to remain elevated, with the CBN expected to keep system liquidity tight via a further OMO sale.
However, the CBN is equally likely to refrain from conducting an OMO auction due to the huge amount of system outflows expected for a Retail SMIS and Bond Auction settlement on Friday.
Adedapo Adesanya