CBN OMO Sale Oversubscribed by 153% as Yields Jump to 14.04%

By Dipo Olowookere

A further sale of treasury bills via Open Market Operations (OMO) was done on Tuesday by the Central Bank of Nigeria (CBN) with the exercise recording a huge success.

It was learnt that the OMO auction was oversubscribed by investors by 153 percent as the apex bank sold N122 billion of the N80 billion offered, with stop rates however maintained at their previous levels.

Business Post reports that three tenors were offered for sale during the day’s exercise, with the 3-month and 12-month maturities significantly getting the attention of market players.

Of the 10 billion worth of the 93-day bill, offers valued at N44.45 billion were received and allotted at 11.90 percent.

Of the N50 billion worth of the 359-day instrument auctioned, the CBN got subscriptions worth N64.89 billion, which were then allotted.

However, the 191-day did not received huge attention like the two other papers. Of the N20 billion worth of the paper, offers worth N14.20 billion were received and sold.

Generally, the T-bills market turned slightly bearish on Tuesday, with the corresponding yields ticking higher by 0.12 percent to settle at 14.04 percent.

Losses were recorded on the one-month tenor and 6-month paper by 0.82 percent and 0.02 percent respectively to apiece at 10.03 percent and 14.03 percent.

However, the three-month note rose by 0.33 percent to close at 12.17 percent, the 9-month instrument appreciated by 1.12 percent to end at 16.56 percent, while the 12-month bill slightly went up by 0.01 percent to settle at 17.39 percent.

“We expect yields to inch slightly higher today due to the relative squeeze in system liquidity from the persistent OMO auction by the CBN,” Zedcrest Research said.

Meanwhile, rates in the money market trended higher by 3 percent as system liquidity was mopped up by a N122 billion OMO sale by the CBN.

The OBB and OVN rates consequently ended the session at 19.50 percent and 20.92 percent respectively.

“We expect rates to remain elevated as there are no significant inflows expected tomorrow,” the investment research said.