By Dipo Olowookere
The Central Bank of Nigeria (CBN) on Monday offered for sale N30 billion worth of treasury bills via the Open Market Operations (OMO).
At the exercise, market players showed huge interests in the one-year paper, but the apex bank, decided not to sell any of the tenor to them. The central bank, at the end of the auction, declared a no sale.
According to Zedcrest Research, this action by the central bank was in a bid to avoid heightening the liquidity pressures in the system.
Business Post reports that N5 billion worth of the 101-day notes were offered for sale, with subscriptions valued at N3.15 billion received. Of the N10 billion worth of the 178-day paper, offers worth N10.57 billion were received, while of the N15 billion worth of the 353-day bills auctioned, the CBN received subscriptions worth N114.05 billion.
Generally, the sentiment in the secondary market for treasury bills was largely bullish owing to the yield declines on the short-dated bills.
This was in response to the liquidity squeeze from the wholesale foreign exchange sale by the apex bank yesterday.
The one-month paper went down by 0.56 percent to settle at 11.50 percent, while the 3-month note fell by 0.05 percent to close at 12.20 percent.
However, the 6-month bill marginally rose by 0.01 percent to finish at 13.67 percent, the 9-month note appreciated by 0.03 percent to settle at 16.66 percent, while the 12-month paper also increased by 0.03 percent to finish at 17.37 percent.
Rates are expected to remain slightly elevated on Tuesday in view of the estimated negative system liquidity levels.
Meanwhile, rates in the money market spiked by 7 percent with system liquidity estimated to have dipped to a negative level of N45 billion on the back of the wholesale FX auction by the CBN.
The Open Buy Back (OBB) and Overnight (OVN) rates consequently ended the session at 23.33 percent and 26.08 percent.
The rates are expected to remain elevated as there are no significant inflows expected today.
Adedapo Adesanya