By Dipo Olowookere
The Central Bank of Nigeria (CBN) on Thursday continued with its mopping up of excess liquidity in the financial system with the sale of treasury bills via Open Market Operations (OMO).
During the OMO auction yesterday, the apex bank soaked a total of N371.6 billion, though not enough to offset the N443.8 billion maturing bills on Thursday.
According to analysts at Zedcrest Research, expectations for a rate increase by the CBN at yesterday’s OMO auction saw spreads expand intraday, with bids touching 14.90 percent on the long-end.
A less than expected increase in the OMO stop rates caused a retracement as yields trended lower by 0.05 percent on the average across the benchmark securities.
At the OMO auction, bids were muted as the maturities on offer were undersubscribed by 0.67 percent.
It was observed that the stop rates on the 98-day bill, 182-day note and 364-day paper were raised by the central bank by 0.15 percent, 0.20 percent and 0.25 percent respectively to settle at 11.65 percent, 13.20 percent and 14.75 percent.
“We expect a re-pricing across the NTB curve due to the uptick at Thursday’s OMO auction. We expect market to trade cautiously as the market settles at a new yield level,” Zedcrest Research opined.
Meanwhile, despite the CBN’s attempt to stem the excess liquidity via the sale of OMO securities, money market rates closed lower at 13.83 percent from 17.17 percent and 14.83 percent from 18.00 percent for Open Buy-Back (OBB) and overnight (OVN) respectively due to OMO maturities of N443.76 billion.
System liquidity is consequently estimated at N205 billion as at close of business, with the funding rates expected to dip further today as market players anticipate inflows from the October FAAC payments.
However, there is an outside chance of the CBN floating a third OMO auction tomorrow to manage liquidity levels.
Adedapo Adesanya 
Modupe Gbadeyanka