Average OMO Yield Rises to 5.67% after CBN Surprise Allotment

Average OMO Yield Rises to 5.67% after CBN Surprise Allotment

Average yield on open market operations (OMO) rises 358 basis points to 5.67% following the Central Bank of Nigeria (CBN) surprise allotment of 356-day bill at 10.10% last week.

On Monday, the Nigerian treasury bills market commenced the new week on a calm note as trades settled flat across the tickers.

Consequently, yields remained at an average of 1.0%.

Also, system liquidity dropped 57.1% to ₦186.1 billion even as the Open Buy Back and Over Night rates remained elevated at 14.0% and 14.3% apiece.

At this level, Greenwich Merchant Bank hinted the rate dropped off from 17.5% and 18.0% on Friday.

“This week, we expect inflows from maturing OMO bills (₦213.9 billion) to support liquidity levels”, Greenwich Merchant Bank said in a report.

In addition, maturing T-bills worth ₦19.8 billion, ₦10.0 billion, and ₦140.0 billion across the 91-day, 182-day, and 364-day instruments respectively will enter the system.

“We however note that the CBN will roll over all maturing T-bills instruments”, analysts at Greenwich Merchant Bank said.

Chapel Hill Denham noted that the OMO curve rose steeply with the average yield up 358 basis points or 3.58 percentage points to 5.67%.

Across the tickers, analysts at Greenwich said there were notable yield increases, even as the long end of the market was the most bearish.

In the Bond market, bearish investor sentiment persisted, following selloffs across the market.

As a result, the average yield firmed up 47bps to 8.5% from 8.0% at the close of last week.

The bearish charge in the market was most pronounced at the belly of the curve (+97bps), the short end (+26bps) then the long end (+14bps).

Notably, the highest yield increase was recorded on the 26-Apr-29 instrument (+159bps).

In the currency market, the Nigerian local currency, Naira, depreciated by 0.58% (₦2.33) against the US dollar in the I&E Window to N398.50.

However, the naira was flat at the official, secondary market intervention sales, and parallel market windows to ₦379.00, ₦380.69 and ₦380.00 respectively.

Average OMO Yield Rises to 5.67% after CBN Surprise Allotment