T-Bills Yields Hit 6-Week Low of 14.73% amidst Buying Pressure
By Modupe Gbadeyanka
Buying interest at the secondary treasury bills market on Thursday, which was supported by slight offshore demand in the market and inflows from OMO and PMA repayments, compressed yields to a 6-week low of 14.73 percent after a 0.21 percent decline.
Business Post reports that yields across all tenors depreciated yesterday except for the 3-month maturity, which appreciated by 0.09 percent to settle at 11.76 percent.
Yields on the one-month bill crashed by 0.43 percent to close at 14.24 percent, the 6-month bill dropped 0.60 percent to finish at 13.88 percent, the 9-month paper fell by 0.05 percent to close at 16.59 percent, while the 12-month note depreciated by 0.04 percent to end at 17.17 percent.
During yesterday’s trading session, the Central Bank of Nigeria (CBN) floated an OMO auction which attracted most of the offshore inflows that came into the market, with total subscriptions of N526 billion of the N550 billion offered and rates maintained across all tenors offered.
However, it was observed that there was an increase in demand for the short and mid tenor OMO offerings.
At the OMO sale, the apex bank allotted N57.25 billion worth of the N50 billion 91-day bill, N64.27 billion worth of the N100 billion 189-day paper, and N405.39 billion 364-day note it auctioned yesterday.
It is expected that the yields will trend higher today as the CBN may likely conduct another OMO exercise, whilst banks fund for a Retail FX auction by the CBN, all of which would compress system liquidity and fuel slight selloff mostly on the short end of the curve.
Meanwhile, rates in the money market moderated by 5 percent to settle at 13.25 percent on the back of the 5.17 percent decline in the Open Buy Back (OBB) rate and the 6.25 percent drop in the Overnight (OVN) rate.
This made the OBB rate to close at declined by 5.17% and 6.25% apiece, thereby settling the average money market rate at 13.25%.
While the OBB rate closed at 13.00 percent, the OVN rate finished at 13.50 percent.
It was observed that at Thursday’s session, inflows from Net OMO and PMA repayments of N80 billion bolstered system liquidity to N60 billion negative from a negative position of N140 billion previously.
With the CBN expected to debit banks for its bi-weekly retail FX intervention, rates should close higher on Friday.