By Dipo Olowookere
The Central Bank of Nigeria (CBN) surprised market players at the secondary market for treasury bills on Monday when it came to the market with an OMO auction.
Business Post reports that at the emergency exercise, the apex bank offered the debt instruments worth N100 billion for sale. However, it went away with N270.3 billion.
The bills were offered in three different maturities; N10 billion worth of 91-day, N30 billion worth of 182-day and N60 billion worth of 364-day bills, but the central bank declared a ‘no sale’ for the three-month tenor despite receiving subscriptions valued at N20 billion from investors.
For the 182-day instrument, subscribers offered N7.65 billion, but only N2.65 billion was allotted at 11.79 percent, while subscriptions worth N272.90 billion were received for the one-year maturity and N267.69 billion sold by the CBN at 13.35 percent.
It was observed that the low subscriptions for the exercise may have been caused by the circular issued by the CBN to banks, directing them not to honour bids from debtors in the banking sector.
At the previous OMO sale, the central bank received offeres worth over N1 trillion from market players, which were very much higher than what was recorded yesterday. The impact of this new policy is already taking its toll on the OMO auction and participation may continue to dwindle in the coming exercises.
Banks have also since been restricted from being heavily involved in investments in government securities so as to boost lending to the real sector of the economy.
Meanwhile, the average yields of treasury bills at the secondary market increased yesterday by 0.27 percent to close at 12.56 percent following renewed sell pressure on the market at the session.
At the close of transaction, only the one-year instrument recorded a slip in yield. The yield depreciated by 0.13 percent to settle at 14.14 percent against 14.27 percent of the previous session.
Yield on the one-month instrument rose during the session by 0.82 percent to 11.74 percent from 10.92 percent, the yield on the three-month bill appreciated by 0.31 percent to 12.05 percent from 11.73 percent, while yield on the six-month tenor increased by 0.08 percent to 12.31 percent from 12.23 percent.
