By Dipo Olowookere
In line with expectations, the Central Bank of Nigeria (CBN) on Thursday floated an Open Market Operations (OMO) to mop up excess liquidity in the financial system.
Business Post reports that the central bank came to the market with N250 billion worth of its liquidity management tool in three different maturities unlike the two is came with at the previous exercise.
The CBN offered N20 billion worth of the 82-day bill, N30 billion worth of the 173-day instrument and N200 billion worth of the 362-day bill and at the end of the sales, it received N5 billion worth of three-month bill, N5 billion worth of the six-month instrument and N243.77 billion worth of the 12-month bill.
However, when it came to allocation, the apex bank sold N5 billion worth of the 82-day tenor at 11.50 percent, N5 billion worth of the 173-day maturity at 11.69 percent and N243.77 billion worth of the 362-day bill at 13.30 percent.
Business Post observed that the stop rates were mostly left unchanged when compared with the previous exercise except for the three-month maturity, which had a No Sale at the last auction.
Meanwhile, at the secondary market for treasury bills yesterday, the sustained demand pressure resulted in yields being significantly depressed further at the close of transactions.
The most hit was the one-year debt instrument, which went down by 4.50 percent to close at 10.19 percent from 14.69 percent.
Yield on the three-month bill depreciated by 2.85 percent to finish at 9.45 percent against 12.30 percent, while yield on the six-month tenor declined by 2.15 percent to close at 9.92 percent from 12.08 percent, with yield on the one-month maturity falling by 1.70 percent to end at 9.80 percent in contrast to 11.50 percent it previously closed.
At the close of business yesterday, the average yields of treasury bills at the secondary market went down by 2.80 percent to 9.84 percent.
The fall in the yields was in reaction to the previous day’s crashing of the stop rates of T-bills at the primary market by the central bank to a single digit.
A look at the money market rates on Thursday showed that the average rates depreciated by 1.32 percent to close at 7.25 percent.
This followed the 1.43 percent loss suffered by the Open Buy Back (OBB) rate to subsequently drop to 6.71 percent from 8.14 percent, and the 1.21 percent decline recorded by the Overnight (OVN) rate to close at 7.79 percent against 9.00 percent it ended on Wednesday.
It was observed that during yesterday’s trading session, the net OMO flows of N162 billion positively impacted market liquidity and with no significant funding anticipated, the rates should remain in the single-digit territory on Friday (today).
Adedapo Adesanya