By Dipo Olowookere
For the umpteenth time, the Central Bank of Nigeria (CBN) has refused to shift ground to raise stop rates of treasury bills sold to investors via secondary market.
At the OMO auction yesterday, which the apex bank conducted to control the volume of liquidity in the financial system, rates were left as they were in the previous exercise.
Market players reacted to the refusal of the central bank to offer higher rate by staying away from the exercise.
Of the N130 billion worth of the OMO bills auctioned by the CBN on Friday, it only received subscriptions valued at N38.7 billion from market players.
Business Post reports that the apex bank offered N20 billion worth of the 90-day bill and received N20 million subscriptions, allotting same at 11.90 percent.
For the 181-day paper, the CBN auctioned N30 billion, but got offers worth N2.04 billion, allotting same at 13.50 percent, while of the N80 billion worth of the 363-day note, it got offers worth N36.67 billion, but allotted N76.19 billion to investors at 15.00 percent.
At the market yesterday, average treasury bills yields stayed elevated as investors sold off slightly on the short end of the curve, whilst there was slight demand around the mid tenors due to the more attractive rates in the secondary market.
“We expect the CBN to maintain its pace of OMO interventions in lieu of the N498 billion in OMO and PMA maturities next week,” analysts at Zedcrest Research noted.
Meanwhile, rates in the money market trended higher by 10 percent on Friday with the Open Buy Back (OBB) and Overnight (OVN) rates closing the week at 24.57 percent and 27.21 percent due to the N78 billion OMO sale by the CBN which is estimated to have compressed system liquidity to N13 billion positive as at close of business. Rates are expected to trend higher in the coming week, as the CBN is expected to maintain its pace of OMO and FX (wholesale & retail) interventions in the market.
Adedapo Adesanya