By Dipo Olowookere
As anticipated, the Central Bank of Nigeria (CBN) conducted the sale of treasury bills through the Open Market Operations (OMO) on Thursday, a day after similar instruments were sold at the primary market.
Yesterday, OMO bills worth N110 billion were offered for sale to non-resident investors, but they gave the investment tool a COVID-19 treatment by avoiding it like a plague.
Unlike the Nigerian Treasury Bills (NTB) sold the previous day, which were oversubscribed by local investors, the OMO bills were undersubscribed by 19.1 percent.
Two of the maturities auctioned at Thursday’s exercise were not subscribed, while the one-year tenor, which was looked at, was poorly demanded for.
About N5 billion worth of the 75-day bill and another N5 billion worth of the 166-day bill were offered for sale by the CBN, but both maturities received no bids from investors. This forced the banking industry watchdog to declare ‘No Sale’ for them.
However, the 348-day instrument, which had N100 billion on offer, got subscriptions worth N21.0 billion from market participants, but only N4 billion was allotted at 12.80 percent at the close of transactions.
Meanwhile, a look at the money market showed that rates further declined on Thursday following OMO maturities and the CBN’s failure to mop up substantial volumes from the financial system.
Consequently, the Open Buy Back (OBB) rate dropped to 2.67 percent from 5.50 percent, while the Overnight (OVN) rate fell to 3.08 percent from 6.08 percent.
According to analysts at Zedcrest Research, “The CBN is expected to attempt a second OMO auction this week to manage excess liquidity, again we do not expect any major impact to money market rates.”
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