By Dipo Olowookere
The Central Bank of Nigeria (CBN) auctioned its liquidity control tool to investors on Thursday via an Open Market Operations (OMO). The exercise was mainly for foreign portfolio investors.
During the sale of the OMO bills, the apex bank offered for sale the debt instrument worth N330 billion in three different maturities; 96 days, 187 days and 362 days.
Business Post reports that the central bank auctioned N50 billion worth of the 96-day bill, another N50 billion worth of the 187-day tenor and N230 billion worth of the 362-day bill.
However, the bank had subscriptions valued at N447.09 billion across the three tenors, while N363.09 billion was allotted at the close of the exercise, with the stop rates for the mid and long tenors slightly slashed by the apex bank, while the stop rate for the short-dated maturity was left intact.
Results of the OMO sale showed that the central bank received bids worth N16.50 billion for the 96-day instrument. This same amount was allotted to traders at 11.55 percent.
For the 187-day tenor, the bank got subscriptions valued at N11.50 billion, but only N10.50 billion was sold at 11.75 percent, lower than 11.79 percent of the previous OMO auction.
For the 362-day bill, the central bank received offers worth N419.09 billion from subscribers yesterday, but N336.09 billion worth of the instrument was allotted to investors at stop rate of 11.32 percent, lower than the 11.34 percent at the October 24 exercise.
Meanwhile, at the secondary market for treasury bills on Thursday, the market came under a buy pressure, which consequently pushed the average yields lower as a result of the decline posted by the benchmark maturities.
The six-month instrument was the most pressured as its yield went down by 0.50 percent to settle at 11.90 percent against the previous day’s 12.40 percent. The three-month tenor followed as its yield went down by 0.31 percent to 11.72 percent from 12.03 percent. Yield on the one-year bill depreciated by 0.21 percent to 14.72 percent from 12.93 percent, while yield on the three-month instrument fell by 0.03 percent to 11.48 percent from 11.51 percent.
At the close of business, the average yields of the four bills went down by 0.26 percent to finish at 12.46 percent.
Meanwhile, activities at the money market yesterday were upbeat as the average rates increased by 1.75 percent to close at 5.00 percent. This came on the back of the 1.86 percent rise posted by the Open Buy Back (OBB) rate and the 1.64 percent growth recorded by the Overnight (OVN) rate.
At the close of transactions, the OBB rate increased to 4.64 percent from 2.79 percent, while the OVN rate appreciated to 5.36 percent from 3.71 percent.
It was observed that the rates still closed in the single-digit region despite a robust system liquidity in the interbank market, which was at N500 billion positive as the apex bank mopped up N3623 billion from the market via an OMO sale.
