T-Bills Market Bearish as CBN Further Cuts Rate by 0.03%

By Dipo Olowookere

The average yields of treasury bills traded at the secondary market closed at 13.26 percent on Tuesday after increasing by 0.46 percent.

This was as negative sentiment at the market continued yesterday with yields rising across all maturities.

Business Post reports that the one-month paper appreciated by 0.45 percent, the 3-month note by 0.97 percent, the 6-month bill by 0.56 percent, the 9-month debt instrument by 0.19 percent and the 12-month paper by 0.14 percent.

At the market yesterday, the Central Bank of Nigeria (CBN) continued with its Open Market Operations (OMO) interventions.

The apex bank offered N150 billion worth of the OMO bills for sale and after receiving subscriptions valued at N177.91 billion from investors, eventually allotting N169.16 billion.

Two maturities were sold yesterday with N28.58 billion of the N50 billion worth of the 100-day bill allotted at 11.90 percent.

Of the N100 billion worth of 192-day paper auctioned, the apex bank received offers valued at N149.33 billion, but only N140.58 billion was allotted at 13.45 percent, lower than the rate of the previous session, which was 13.48 percent.

According to analysts at Zedcrest Research, “We expect the market to remain scantily traded as market players look forward to the possibility of a long tenor OMO offering on Thursday where we have N129 billion in maturing OMO bills.”

Meanwhile, rates in the money market further depreciated yesterday by 4.59 percent to close at 9.88 percent.

This was on the back of the 4.67 percent decline recorded by the Open Buy Back (OBB) and the 4.50 percent fall posted by the Overnight (OVN) rate.

However, the system liquidity remained moderately robust as a result of inflows from the Paris Club refunds and the Investors and Exporters (I&E) foreign exchange purchases by the central bank.

At the close of business, the OBB dropped to 9.33 percent from 14.00 percent, while the OVN rate went down to 10.42 percent from 14.92 percent.

Rates are anticipated to remain relatively stable today barring a significant OMO sale by the apex bank.