Dipo Olowookere
By Dipo Olowookere
After a long hiatus, the Central Bank of Nigeria (CBN) resumed the conduct of its Open Market Operations (OMO) on Monday.
During the exercise, the apex bank offered OMO bills worth N400 billion to investors across three maturities; 101-day, 255-day and 353-day bills.
Business Post reports that the central bank auctioned to market players yesterday N50 billion worth of the 101-day bill, N150 billion worth of the 255-day instrument and N200 billion worth of the 353-day bill.
However, much of the subscriptions were for the long-tenor, which had N700.79 billion offers from investors. This forced the CBN to lower the stop rate by 0.08 percent to 12.40 percent, allotting N352.83 billion to subscribers.
For the mid-tenor, the apex received subscriptions worth N56.81 billion and its stop rate was raised by 0.21 percent to 11.84 percent, with N43.11 billion allotted to subscribers.
The short-tenor received less subscriptions from market players; N6.06 billion, with the central bank allotting only N4.06 billion and its stop rate left unchanged.
Business Post reports that at the end of the exercise, the apex bank received total subscriptions worth N763.66 billion for the N400 billion OMO bills auctioned on Monday, with N400 allotted to investors.
It was observed that CBN floated yesterday’s OMO auction after nearly a month absence so as to mop up excess system liquidity from bond maturity inflows into the system, about N351 billion worth of the Jun 2019 FGN bond.
According to Zedcrest Research, the apex bank is expected to float another OMO auction due to anticipated FAAC inflows into the system, saying, “Barring the aforementioned, yields should maintain a downtrend as market players look to fill lost out bids at the auction.”
Business Post further observed that the average treasury bills yield at the secondary market closed higher yesterday by 0.19 percent to settle at 12.16 percent.
This was caused by the rise in the yield across the maturities on Monday, with the one-month instrument recording the highest gain of 0.49 percent to close at 10.91 percent.
Yield on the three-month bill appreciated by 0.17 percent to finish at 11.80 percent, the one on the six-month bill rose by 0.02 percent to settle at 12.54 percent, while the one on the 12-month instrument rose by 0.06 percent to close at 13.39 percent.
Meanwhile, the average rates in the money market finished 4.22 percent higher on Monday to settle at 8.54 percent.
This followed the mopping up of N400 billion from the system by the apex bank yesterday via the sale of OMO bills to investors.
As a result, the Open Buy Back (OBB) rate went up by 4.14 percent to settle at 8.14 percent, while the Overnight (OVN) rate rose by 4.29 percent to close at 8.93 percent.
Barring any further OMO sale by the CBN, the rates are expected to trend lower today due to expected inflows from FAAC payments.
