Bearish Sentiment Dominants T-Bills Market as CBN Mops up N189.7b
By Dipo Olowookere
The treasury bills market was slightly depressed on Thursday with bearish sentiment dominating the market space.
According to analysts at Zedcrest Research, most trading activities at the market yesterday were tilted towards the short end of the curve.
The medium to long end of curve remained muted due to the floatation of another OMO auction by the Central Bank of Nigeria (CBN).
This was part of efforts by the central bank to mop up inflows from corresponding maturing OMO T-bills and lingering excess cash from FAAC disbursements.
Business Post reports that during the exercise, the apex bank sold treasury bills worth NN189.73 billion.
The CBN eventually succumbed to investor pressure for higher yields amidst weak subscription, raising the stop rate for the longest offered tenor (182days) to 12.50 percent from 12.15 percent offered previously.
A total of N550 billion worth OMO bills were offered to investors by the bank, but it eventually sold N34.30 billion worth of the 63-day bills at 10 percent, N55.34 billion worth of the 126-day bills at 11.50 percent and N100.09 billion worth of the 182-day bills at 12.50 percent.
The shift in stop rates at the OMO auction will likely lead to bearish sentiments in T-bills market especially at the medium to long end of the curve.
“We expect a lethargic trading session tomorrow to wrap up for the week,” Zedcrest Research said.
Meanwhile, interbank lending rates remained relatively stable, as the OBB and OVN closed at 3 percent and 3.83 percent respectively.
System liquidity is estimated to close yesterday at about N600 billion net positive after the sale of a total of N189.73 billion at the OMO auction, which was not sufficient to offset corresponding inflows from N292.52 billion OMO maturities.
The rates are expected to close on a calm note, with no significant outflows expected closing the week. This is however barring another OMO auction by the CBN due to the high systemic liquidity.