Treasury Bills Yields Rise 0.11% to 12.67% Tuesday

By Dipo Olowookere

It was bearish market for treasury bills on Tuesday, a day after the Central Bank of Nigeria (CBN) floated an unexpected Open Market Operations (OMO), where it sold the debt instruments worth over N250 billion to market players.

At yesterday’s session, the apex bank did not approach the market for another mop up of liquidity in the financial system as traders anticipate the maturing of T-bills worth N315.99 billion via the secondary market on Thursday as well as inflow of the recently disbursed FAAC allocation of N693.53 billion.

Business Post observed that yields increased across most maturities monitored yesterday, but on the average, it went up by 0.11 percent to settle at 12.67 percent.

Only the one-month tenor closed flat during the session to finish at 11.74 percent.

Yield on the one-year maturity rose by 0.25 percent to 14.34 percent from 14.14 percent, yield on the three-month bill appreciated by 0.13 percent to 12.18 percent from 12.05 percent, while yield on the six-month instrument increased by 0.04 percent to 12.35 percent from 12.31 percent.

It is not certain if the apex bank will decide to conduct another OMO auction today, but there are strong possibilities that one more would likely be carried out before the end of this trading week so as to soak excess cash in the system.

With this in mind, traders would most likely be passive at the market today in preparation for this OMO sale by the CBN and would hope the stop rates are marginally reduced. If the central bank decides to sell today, there should be another cut in rates on the one-year tenor.

Meanwhile, activities at the money market were not too impressive yesterday as the average rates depreciated by 2.79 percent to close at 4.72 percent.

This followed the 4.79 percent lost by each of the Open Buy Back (OBB) rate and the Overnight (OVN) rate during the trading session. At the close of business, the OBB rate went down to 4.43 percent from 7.21 percent, the OVN rate dropped to 5.00 percent from 7.79 percent.