T-Bills Yields Drop 0.09% Amid Weak OMO Subscriptions

By Modupe Gbadeyanka

The Central Bank of Nigeria (CBN) conducted the sale of treasury bills via Open Market Operations (OMO) yesterday. However, the exercise recorded a poor participation of market players, who stayed away from it.

The central bank, which had offered treasury bills worth N60 billion to investors across three tenors, could only make N10.7 billion from the auction.

Business Post reports that N10 billion worth of the 107-day bills were offered to investors, but only N2 million was raised sold at 11.90 percent.

Also, N20 billion worth of the 170-day notes were auctioned on Tuesday, but subscriptions valued at N76 million were received and sold at 13.50 percent, while N30 billion worth of the 317-day papers were offered with N9.95 billion made from the this sale at 15.00 percent.

Business Post reports further that yields declined across the maturities yesterday with the exception of the 0ne-month note, which rose by 0.25 percent to settle at 15.39 percent.

Yields on the 3-month paper fell by 0.20 percent to close at 12.89 percent, the 6-month bill declined by 0.06 percent to finish at 14.47 percent, the 9-month note depreciated by 0.03 percent to settle at 16.57 percent, while the 12-month instrument crashed by 0.05 percent to end at 17.26 percent.

At the close of business on Tuesday, the average treasury bills yields depreciated by 0.09 percent to settle at 15.32 percent, influenced mainly by the further tightening of system liquidity via the OMO sale.

The yields are expected to remain pressured as market players anticipate continued OMO interventions by the apex bank.

Meanwhile, the average money market rate settled at 26.13 percent yesterday as a result of the 0.83 percent and 0.75 percent fall in the Open Buy Back (OBB) and the Overnight (OVN) rates respectively.

At the close of transactions, the OBB rate dropped to 25.00 percent from 25.83 percent, while the OVN rate fell to 27.25 percent from 28.00 percent. It is expected that the rates should remain at current levels, as there are no significant inflows expected today.