By Dipo Olowookere
The Central Bank of Nigeria (CBN) yesterday continued with its usual mopping up of excess liquidity from the financial system with the offering of treasury bills to investors via Open Market Operations (OMO).
However, the exercise was marred with low turnout as investors continued to undersubscribe to the OMO auction by the apex bank.
This is largely due to the fact that the central bank has failed to push the stop rates upward to attract market players, who want better return.
Of the N150 billion worth of the debt instruments offered for sale on Tuesday by the CBN, subscriptions valued at N24.6 billion were received and eventually allotted.
Business Post reports that N20 billion worth of the 100-day bills were auctioned yesterday with N6 billion offers received and sold to investors at 11.90 percent.
Also, N30 billion of the 205-day bills were offered to market players with subscriptions worth N1.06 billion received and allotted at 13.50 percent, while N50 billion worth of the 310-day bills were auctioned with offers worth N17.54 billion received and sold at 15.00 percent.
Generally, the T-bills market was bearish with the average yields closing higher by 0.05 percent as selloffs on the short end of the curve outpaced slight demand around some mid tenors.
“We expect the market to remain slightly bearish as the CBN maintains pressure on system liquidity via its continued OMO auctions,” Zedcrest Research noted.
Meanwhile, rates in the money market moderated by 0.20 percent on Tuesday with the Open Buy Back (OBB) and Overnight (OVN) rates closing at 19.33 percent and 21.95 percent.
This was as system liquidity opened the day at about N43 billion positive, whilst market players were able to access the CBN’s SLF window to fund their obligations.
With the OMO sale of N25 billion during the trading day, system liquidity was estimated at N18 billion positive.
The rates are expected to remain elevated today with the CBN expected to conduct another round of OMO interventions due to the N472 billion in OMO maturities expected on tomorrow (Thursday).
Adedapo Adesanya