By Dipo Olowookere
The Central Bank of Nigeria (CBN) on Tuesday conducted its first sale of treasury bills via the secondary market in nearly three weeks.
The last OMO sale exercise conducted by the apex bank was on April 4, 2019, where it offered two maturities.
However, at the exercise yesterday, the central bank offered the debt instruments to investors in three tenors and Business Post observed that the OMO auction was undersubscribed, but with more subscriptions on the long-dated bills.
Of the N50 billion worth of the 93-day bill offered during the exercise, subscriptions valued at N7.42 billion were received and allotted by the apex bank.
For the 184-day paper, offers worth N1.78 billion of the N50 billion auctioned were received, while the CBN only allotted N500 million, while for the N100 billion worth of the 359-day bill, offers valued at N284.48 billion were received, with only N158.66 billion allotted.
However, it was observed that the stop rates cleared lower during the auction.
The 93-day bill cleared at 11.80 percent, the 184-day tenor was sold at 12.90 percent instead of 12.95 percent at the last exercise, while the 359-day maturity cleared at 13.03 percent against 13.94 percent of the previous session.
At the market on Tuesday, the announcement of the OMO sale by the central bank caused a selloff of long-end tenors, which brought about a reversal in the yields.
With system liquidity remaining pressured by outflows from forex and bond sale funding later this week, yields are expected to to trend higher.
At the money market yesterday, the average rates increased by 7.54 percent to settle at 17.75 percent.
This followed the 7.43 percent appreciation recorded by the Open Buy Back (OBB) rate and the 7.64 percent growth posted by the Overnight (OVN) rate.
The OBB rate consequently ended at 17.29 percent, while the OVN rate closed ar 18.21 percent.
Adedapo Adesanya