By Dipo Olowookere
The hunger of investors for short and mid-term treasury bills issued by the Central Bank of Nigeria (CBN) through the Open Market Operations (OMO) seems to be gradually waning by the day.
Over a period of time, the low interest rates the apex bank offers the two tenors at the market has turned traders off, preferring to put their money on the long-dated tenor.
Yesterday, the central bank held its usual weekly OMO auction and results from the exercise showed that the 89-day and the 180-day maturities were again snubbed by foreign portfolio investors, who the apex bank has now tailored the investment tool for because of the foreign exchange they bring into the economy, helping to boost the external reserves.
Business Post reports that the central bank offered OMO bills worth N100 billion across three maturities, but only one attracted the attention of market participants.
The apex bank auctioned N10 billion worth of 89-day bill, another N10 billion worth of 180-day bill and N80 billion worth of 362-day bill during the exercise yesterday.
However, the short and mid-term instruments received no bids from traders, who chased the long-dated maturity all around with N112.11 billion.
Consequently, the 89-day and 180-day tenors were not sold, but the CBN allotted N110.51 billion for the 362-day maturity at 12.99 percent. This stop rate was lower than the 13.00 percent it was sold last week at the OMO auction.
Meanwhile, at the secondary market for the Nigerian Treasury Bills, the average yields declined by 0.15 percent to 3.86 percent on the back of buying pressure witnessed during the trading day.
Of the four maturities tracked, only one, the one-year instrument, recorded a growth in yield, 0.10 percent, closing at 5.50 percent in contrast to the previous 5.40 percent.
The one-month bill lost 0.39 percent to settle at 3.06 percent against 3.45 percent of the previous session. The three-month tenor depreciated by 0.20 percent to 3.16 percent from 3.36 percent, while the six-month maturity fell by 0.09 percent to 3.71 percent from 3.80 percent.
A look at the money market showed that the average rates slightly moved up by 0.28 percent to 15.11 percent. This followed the 0.07 percent growth printed by the Open Buy Back (OBB) rate and the 0.48 percent appreciation recorded by the Overnight (OVN) rate.
Business Post reports that when market activities were wrapped up on Thursday, the OBB rate rose to 14.57 percent from 14.50 percent, while the OVN rate jumped to 15.64 percent from 15.17 percent.
Adedapo Adesanya