By Dipo Olowookere
The hunger earlier shown by offshore investors to the treasury bills issued by the Central Bank of Nigeria (CBN) through Open Market Operations (OMO) is beginning to wane.
Last year, the apex bank restricted local retail and non-financial institutions from investing in the liquidity management tool, but allowed only foreign portfolio investors to buy.
This was ostensibly done to attract foreign exchange into the country to bolster the nation’s external reserves, which was getting threatened through depletion following reduction in the prices of crude oil at the global market.
While the CBN left the stop rates of its OMO bills at double digits for offshore investors, the rates of the Nigerian Treasury Bills (NTB), which domestic investors were allowed to invest in, were reduced to as low as 2.30 percent as at the last auction on Wednesday, when inflation is reading 12.20 percent.
On Thursday, a day after the treasury bills sale at the primary market, the central bank took N150 billion worth of its OMO bills to the secondary market, but investors practically ran away from the investment tool, avoiding the instrument like the deadly coronavirus.
In fact, the central bank only received subscriptions worth N18 billion and the apex bank consequently declared No Sale at the end of the exercise.
Business Post reports that the CBN had offered the bills across three different maturities; 89-day, 180-day and 362-day at N10 billion, N10 billion and N130 billion respectively.
However, no bid was made for the three-month maturity, while the six-month tenor received N2 billion and the 12-month maturity got a paltry N16 billion. The CBN returned with the bills with its tail tucked firmly between its legs.
A look at the secondary market for treasury bills indicated that yields depreciated yesterday for most maturities monitored during the session on the back of sustained buy pressure.
Only the one-year instrument recorded a growth in yield, rising marginally by 0.05 to 4.50 percent from 4.45 percent.
However, yield on the three-month instrument depreciated by 0.25 percent to 2.65 percent from 2.90 percent, the six-month maturity fell by 0.21 percent to 3.33 percent from 3.54 percent, while the one-month tenor declined by 0.07 percent to 2.41 percent from 2.48 percent.
Consequently, the average yields of the T-bills depreciated by 0.12 percent to 3.22 percent from 3.34 percent.
Meanwhile, inflows from OMO maturities of about N300 billion boosted liquidity at the market and the inability of the CBN to mop up the excess cash yesterday led to the 5.25 percent decline in the average money market rates.
The Open Buy Back (OBB) rate dropped 5.20 percent to 5.20 percent from 10.40 percent, while the Overnight (OVN) rate declined by 5.30 percent to 5.90 percent from 11.20 percent.
