OMO Bills Yield Climbs to 24.70%, CBN Opens Auction
Nigerian open market operation bills climbed slightly in the secondary market to 24.70% as banks and foreign portfolio investors continue to increase holdings.
OMO bills experienced firm buying interest, particularly at the short and long ends, where yields declined by 31 basis points (bps) to 25.53% and 25bps to 23.49% per annum, Coronation Research said in an update on Monday.
Fixed income market analysts said the medium segment saw a 30bps contraction to 24.64%, resulting in a marginal 1bp uptick in average OMO yield to 24.70% from 24.69% the previous week.
Responding to FAAC inflows of N850 billion that boosted financial system liquidity to N1.35 trillion, in addition to other inflows, the CBN floated bills for investors subscription on Monday at its.
The fresh OMO issuance targets excess liquidity in the banking system. Banks and foreign portfolio investors participation is expected to be strong, given the previous main auction pause.
The outflow for the OMO auction could tighten system liquidity and add to market caution. As a result, mixed sentiment may persist across fixed income segments.
On the bond side, Coronation Research analysts expect yields on the 2032s to settle around current mid-curve secondary market levels, while the 2029s could close below the 16.00% threshold. The debt office is in the market to raise N80 billion across 5 and 7 years bonds.
Given these dynamics, investors are likely to retain a preference for long-dated instruments, seeking to lock in currently attractive yields amid a relatively stable monetary policy environment. #OMO Bills Yield Climbs to 24.70%, CBN Opens Auction Transcorp Hotels Interim Dividend Signals Confidence, But Is the Stock a BUY at N142.40?
