T-Bills Yields Drop 0.40% as CBN Mops up N321bn

By Dipo Olowookere

The Central Bank of Nigeria (CBN) approached the market on Thursday as expected to sell some treasury bills through the Open Market Operations (OMO).

This was done to mop up some excess liquidity in the financial system coming from the maturing instruments via the secondary market as well as disbursement of FAAC allocations.

During the session, the central bank soaked a total of N320.7 billion from the OMO sales offered to market participants in three different maturities; 94-day, 185-day and 353-day bills

At the market yesterday, the CBN offered the OMO bills worth N350 billion to investors, but went away with N320.7 billion, lower than what it wanted.

Business Post reports that N30 billion worth of the 94-day, N70 billion worth of the 185-day instrument and N250 billion worth of the 353-day bill were auctioned by the apex bank.

However, when it examined the subscriptions, the bank found out that subscribers staked N5.50 billion on the 94-day bill, N30.55 billion on the 185-day bill and N347.73 billion on the 353-day bill.

When the allotment was done by the central bank, it sold N5.50 billion worth of the 94-day bill at 11.55 percent, N30.55 billion worth of the 185-day bill at 11.79 percent and N284.53 billion worth of the 353-day bill at 13.34 percent.

It was observed that participation in Thursday’s OMO auction was low and this was attributed to the recent directive of the CBN to banks that government debt instruments should not be sold to customers who take loan for the purpose.

Before this new directive, the OMO sales last week had subscriptions worth over N1 trillion, but the last two this week have been below N400 billion.

At the secondary market yesterday, treasury bills yields declined by 0.40 percent to settle at 12.71 percent as yields fell across the tenors monitored.

Yield on the one-month instrument depreciated by 0.53 percent to close at 11.90 percent from 12.43 percent, yield on the three-month maturity fell by 0.48 percent to close at 12.03 percent from 12.52 percent, yield on the six-month tenor went down by 0.34 percent to 12.60 percent from 12.94 percent, while yield on the 12-month bill declined by 0.29 percent to 14.32 percent from 14.61 percent.