By Dipo Olowookere
The Central Bank of Nigeria (CBN) surprisingly sold treasury bills on Monday at the secondary market via an Open Market Operations (OMO).
During the exercise, the apex bank mopped up N54.62 billion from the financial system with sales recorded only in the 192-day and 353-day tenors, while the 87-day received no subscription despite the bank offering N20 billion worth of the note.
Business Post reports that the exercise was undersubscribed and of the N100 billion worth of the 353-day paper offered to investors yesterday, subscriptions valued at N43.06 billion were received, while the CBN eventually sold N40.56 billion with the stop rate left at 15 percent.
For the 192-day bill, the central bank offered N30 billion to market players, but offers worth N14.06 billion were received, which the bank eventually allotted at 13.50 percent, same rate with the last exercise.
As earlier projected by Business Post analysts, the central bank is expected to be aggressive with its mop up via OMO sales this week as a result of the huge inflows into the market from maturing bills and FAAC payments, which are nearly one and half trillion naira.
But generally, the treasury bills market opened the month on a bearish note, with the benchmark securities remaining largely untouched, while the yields expanded by 0.25 percent across the entire NTB curve especially at the short-end.
According to Zedcrest Research, the December maturities lost the most, as yields ticked higher by 1.10 percent in that space.
At the money market, the average rate depreciated on Monday as the Open Buy-Back (OBB) and Overnight (OVN) rates dropped to 6.67 percent and 7.67 percent respectively.
The decline in the rates was as a result of the FAAC payments hitting the system during the trading session.
Funding rates are expected to oscillate in tandem with the level of liquidity as the CBN looks to curtail excess cash from the system via aggressive OMO auctions.
Adedapo Adesanya