T-Bills Reverse Gains as CBN Mops up N496b via OMO Sales

By Dipo Olowookere

The treasury bills market ended bearish on Thursday after profit taking dominated the market, leaving the yields to expand by about 0.16 percent on the average across the benchmark securities.

It was gathered that yesterday’s poor outcome reversed the gains recorded from the previous trading sessions at the market.

According to analysts at Zedcrest Research, the profit taking occurred yesterday as market players positioned for higher yields at the OMO auction floated by the Central Bank of Nigeria (CBN).

The apex bank sold a total of N496.25 billion treasury bills at the Open Market Operations (OMO) auction across two maturities, effectively clearing out the entire demand.

The 91-day and 210-day bills on offer to investors were closed out at stop rates of 11.05 percent and 12.15 percent respectively.

Business Post reports that while the central bank raised N60.77 billion from the N100 billion worth of the 91-day bills, N435.48 billion was realized from the N450 billion worth of the 210-day bills on offer.

“We expect market participants to continue sell-offs on the short to mid-end of the curve to provide funding for the SMIS Retail FX sale expected by the CBN today. The funding pressures thus supporting our bearish outlook for T-bills,” Zedcrest Research said.

Meanwhile, despite the sale at the OMO auction by the CBN yesterday, system liquidity remained buoyant to close at around N397.16 billion.

Rates in the interbank money markets closed trading at 6.83 percent and 7.42 percent for the Open Buy-Back (OBB) rates and overnight (O/N) respectively.

Expected funding pressure from the SMIS Retail FX sale by the CBN on Friday (today) should cause a further squeeze in liquidity, and an uptick is expected in the interbank funding rates to close the week.