By Dipo Olowookere
The average yields of the benchmark Nigerian treasury bills increased on Monday on the back of renewed bearish activity. The market was quiet as investors look forward to the primary market auction (PMA) taking place tomorrow.
The apex bank is anticipated to auction the bills worth N154.4 billion to local investors, which include retail and institutional. The instruments would be sold in 91-day bills worth N4.38 billion, 182-day bills worth N10.00 billion and 364-day bills worth N140.00 billion.
At yesterday’s session, yields rose across the four maturities tracked by Business Post, with the 3-month instrument raking the highest gain, 1.75 percent, to close at 4.96 percent in contrast to 3.21 percent of the previous session.
Yield on the 12-month bill increased by 0.41 percent to 5.19 percent from 4.78 percent, the one-month tenor rose by 0.20 percent to 3.23 percent from 3.03 percent, while the six-month maturity jumped by 0.09 percent to 3.89 percent from 3.80 percent.
At the close of transactions, the average yields of the four maturities increased by 0.61 percent to settle at 4.32 percent.
Commenting on the outcome of the treasury bills market on Monday, analysts at Zedcrest Research said the cautious trading witnessed during the session is expected to continue in the interim especially with the tightened system liquidity.
“We, however, expect strong demand as inflows from bond (N600 billion) and OMO (N400 billion) maturities flow in the system later in the week,” they submitted in their report.
A cursory look into activities at the money market yesterday showed that there was a further squeeze in liquidity following the provision of Cash Reserve Ratio (CRR) by banks along with the anticipated debits for forex wholesale.
This scarcity of cash in the financial system led to the sharp increase in rates at the money market yesterday by an average of 9.75 percent to 15.67 percent.
Business Post reports that the Open Buy Back (OBB) rate jumped by 9.83 percent to 15.33 percent from 5.50 percent, while the Overnight (OVN) rate rose by 9.67 percent to 16.00 percent from 6.33 percent.
“We anticipate rates to remain in double-digits figures with further stifling of system liquidity as more banks expect to be debited with the CRR,” Zedcrest Research noted.
