OMO Bills Yield Drop as CBN Fails to Float Auction
OMO bills yield declined due to sustained buying interest in the absence of the Central Bank of Nigeria (CBN) open market operations.
Eligible investors’ – banks and foreign portfolio investors – appetite for the naira assets via secondary market transactions heated up as the authority failed to replace expired OMO bills.
The CBN inaction fuelled a significant spike in liquidity level in the financial system, crossing N4 trillion at the close of the trading session in the money market last week.
With the recent rate cut, the market anticipates rates repricing across the fixed income market, and this will also induce investors to adjust their portfolios and optimise returns on holdings.
Trading activities on OMO Bills benefitted from sustained liquidity and the absence of new CBN issuance, with heavy demand seen on key maturities.
Barring liquidity mop-up operations by the CBN, with upcoming inflows from OMO maturities totalling N731.14 billion, the system’s liquidity is expected to remain solid, likely exerting further downward pressure on money market rates. #OMO Bills Yield Drop as CBN Fails to Float Auction#
