By Dipo Olowookere
The anticipation of an Open Market Operations (OMO) auction by the Central Bank of Nigeria (CBN) on Thursday (today) pushed the average yields of treasury bills higher at the secondary market yesterday (Wednesday).
Business Post observed that during the midweek trading session, profit-takers mounted pressure on the market, selling off the debt instrument to prepare for today’s exercise by the apex bank. This was done in expectation of higher rates during the OMO sale.
At the close of transactions yesterday, the secondary market for treasury bills closed bearish, with yields rising across the four maturities tracked at the session.
An analysis showed that yield on the one-month instrument rose by 0.32 percent to 12.02 percent from 11.70 percent, yield on the three-month tenor increased by 0.19 percent to 12.23 percent from 12.04 percent, yield on the six-month tenor appreciated by 0.42 percent to 12.82 percent from 12.40 percent, while yield on the 12-month bill jumped by 0.06 percent to 14.91 percent from 14.85 percent.
Consequently, the average yields of the four bills increased by 0.25 percent to settle at 13.0 percent at the close of business on Wednesday.
As regards today’s expected OMO auction, there are strong indications that the demand would be mild as a result of the recent directive from the central bank, restricting individuals and institutional investors from partaking in the exercise.
Analysts are not expecting to see subscriptions hit the N1 trillion mark it did about three weeks ago, which prompted the CBN’s action on who to buy and not to purchase its OMO bills.
Meanwhile, the average money market rates increased on Wednesday by 1.15 percent to settle at 5.0 percent. This was caused by the 0.93 percent rise in the Open Buy Back (OBB) rate and the 1.36 percent increase in the Overnight (OVN) rate at the session.
Consequently, the OBB rate moved to 4.50 percent from 3.57 percent, while the OVN rate rose to 5.50 percent from 4.14 percent.
Modupe Gbadeyanka