By Dipo Olowookere
For the first time in a long period, the Open Market Operations (OMO) conducted by the Central Bank of Nigeria (CBN) suffered an undersubscription on Thursday despite anticipation.
The apex bank had approached the market with its OMO bills worth N280 billion, but it eventually went home with N232.5 billion worth of the liquidity management instrument at the close of the exercise.
Before yesterday, the OMO sale used to record oversubscriptions, but recent directives of the central bank barring local investors from the exercise have lowered the participation rate.
Business Post reports that the bank offered the bills yesterday in two different maturities unlike in the past sessions, where it auctions in three tenors.
At the market on Thursday, the CBN offered N30 billion worth of the 180-day OMO bills for sale to traders and N250 billion worth of the 362-day instrument. However, when the subscriptions were analysed, investors staked N8 billion on the six-month bill and N244.45 billion on the one-year bill.
The CBN was left with no option than to allot what market players bidded for during the session, but with the stop rates slightly lowered.
For the 180-day instrument, the rate cleared at 11.69 percent, lower than 11.75 percent of the previous exercise, while stop rate for the 362-day instrument cleared at 13.30 percent, lower than 13.32 percent of the last OMO auction.
Meanwhile, at the secondary market for treasury bills on Thursday, yields increased for most maturities tracked on the back of sustained bearish market activity. Only the long-end of the curve suffered a decline in yield, going down by 0.14 percent to 14.78 percent from 14.91 percent.
Yield on the one-month bill increased by 0.20 percent to 12.22 percent from 12.02 percent, yield on the three-month rose by 0.41 percent to 12.65 percent from 12.23 percent, while yield on the six-month tenor appreciated by 0.29 percent to 13.11 percent from 12.82 percent.
Business Post reports that as at the close of transactions yesterday, the average yields of the benchmark treasury bills closed at 13.19 percent after appreciating by 0.19 percent.
