T-Bills Market Trades Bullish as Overnight Rate Drops to 2.50%

By Dipo Olowookere

The treasury bills market was slightly bullish on Wednesday as the Central Bank of Nigeria (CBN) conducted another Primary Market Auction (PMA) yesterday.

During the exercise, the apex bank offered traders treasury bills worth N46.60 billion and it raised this amount.

However, it was observed that the T-bills were moderately over-subscribed as the central bank received subscriptions worth N103.40 billion from market players, who were mostly non-competitive bidders.

At the close of transactions yesterday, the T-bills market was upbeat with demand skewed to the shorter end of the curve, as system liquidity remained significantly buoyant following inflows from around N300 billion bond maturity.

As a result, analysts at Zedcrest Capital expects a slight uptick in yields today, “as we expect the CBN to conduct another OMO auction due to about N305 billion inflows from maturing OMO bills.”

Meanwhile, there was a significant decline in the money market rates on Wednesday from what was obtained at the last session.

Specifically, the Overnight rate dropped to 2.50 percent yesterday from 4.42 percent in the previous session, while the Open Buy Back (OBB) rate depreciated further to 1.75 percent from 3.67 percent.

The decline in the rates occurred as system liquidity was estimated to have increased significantly to about N600 billion positive, following inflows from Wednesday’s bond maturity.

However, the rates are anticipated to tick slightly higher on Thursday as the CBN is expected to intervene in the market today via an OMO auction sale.