Treasury, OMO Bills Yields Mixed after Undersubscribed CBN Auctions
The average yield on Nigerian Treasury bills cleared lower to about 22% as activities in the secondary market ended the week on a mixed note. There was a surge in OMO bills yields due to selloffs as CBN slowed down on rates adjustments.
In the secondary market, traders said there was huge sell-offs of the 17-day to maturity bill in the beginning of the week. Consequently, the average yield across all instruments advanced by 42 bps to 21.7%.
Across the market segments, the average yield at the T-bills segment expanded 19 basis pointsbps to 22.5%, Cordros Capital Limited stated in an update. In their separate market update, fixed income securities analysts reported that yield on OMO Bills increased by 128 basis points to 20% in the secondary market after the apex bank primary market auction.
This happened following an underwhelming OMO auction. At the Treasury bill primary auction conducted last week, the CBN offered instruments worth N179.36 billion. The offer was split into N39.90 billion for the 91-day, N5.44 billion for the 182-day, and N134.02 billion for the 364-day bills.
Fixed interest securities traders said the auction was massively contested as the total subscription settled at N914.05 billion – recording a bid-to-offer ratio of 5.1x. Eventually, the CBN allotted bills worth N274.67 billion. The allotment was split into N16.59 billion for the 91 day bills, N5.44 billion for the 182 day bills, and N252.64 billion for the 364-day bills.
Spot rates were retained amidst worsening inflation conditions and a higher interest rate environment. Auction details showed that the stop rate on 91-day bills cleared at 16.24%, the same as in the previous auction.
Also, 182-day bills was sold at 17.00% while Apex Bank offered the same rate as the previous 364-day bills, priced at 20.70%. At the OMO auction, the CBN offered participants instruments worth N500.00 billion. The total subscription at the auction settled at N286.65 billion, translating to a bid-to-offer ratio of 0.6x.
CBN allotted N260.65 billion to successful bidders, split into N20.50 billion for the 99-day, N1.00 billion for the 183-day and N239.15 billion for the 365-day.
The apex bank also made a moderate adjustment to spot rate pricing on the OMO bill. Short-term OMO bills was priced at 18.99%, marginally lower than the 19.00% previously offered on the same bills.
At the belly, the CBN priced 181-day bills at 19.48%, 2 basis points below the 19.50% previous sale. Spot rates on 363-day OMO bills was sold at 21.50%, up from 21.13% at the previous auction. PZ Cussons 27% Cheaper, Still Above Offer Rejected by SEC
