Yields Steady After CBN Sells OMO Bills Worth N40 Bln
Average yields across the fixed income market segments were flattish on Friday after the Central Bank of Nigeria (CBN) conducted an open market operation (OMO) where bills worth N40 billion was sold to investors.
Meanwhile, the fixed income market still riding on low waves amidst pressures on the consumer price index and monetary policy committee decision to hold key rates.
In the money market, the financial system liquidity position sloped downward, causing short term interest rates to jerk up. Consequently, the average interbank rate inched higher on Friday due to a record increase in open buy back and overnight rates.
Data from FMDQ Exchange shows that the overnight lending rate inched forward by 0.25 per cent to close at 1.25 per cent as against the last close of 1.00 per cent.
Also, the Open Repo (OPR) rate expanded by 0.50 per cent to close at 1.00 per cent compared to 0.50 per cent on the previous day.
In the secondary market for Nigerian Treasury Bills, trading activities ended on a flat note with the average yield across the curve remaining unchanged at 4.48 per cent.
Average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.68 per cent, 4.05 per cent, and 5.40 per cent, respectively, according to a market report from FSDH Capital.
In the OMO bills market, the average yield across the curve closed flat at 5.65 per cent. Average yields across short-term and long-term maturities remained unchanged at 5.31 per cent and 5.82 per cent, respectively.
the CBN held an OMO auction on Thursday, selling bills worth ₦40.00 billion across the 96-day (₦10.00 billion), 180-day (₦10.00 billion), and 362-day (₦20.00 billion) tenors with the stop rates remaining unchanged at 7.00 per cent, 8.50 per cent, and 10.10 per cent, respectively.
Read: CBN Sells N50 Bln OMO Bills at 7%, 8.5% and 10.10%
The auction was heavily oversubscribed, indicating a subscription level of 693 per cent (₦277.24 billion), FSDH Capital noted. Fixed income traders said demand was skewed towards long tenor maturity bills with bid-to-cover ratios settling at 5.03x (96-day), 6.95x (180-day), and 7.87x (362-day).
Elsewhere, trading activities at the Federal Government of Nigeria (FGN) bonds secondary market closed on a flat note. The average bond yield across the curve closed flat at 11.54 per cent.
Average yield across the short tenor of the curve expanded by 18 basis points due to traders’ sell down, while the average yield across the medium tenor of the curve declined by 12 basis points following a buying interest. However, the average yield across the long tenor of the curve remained unchanged.
The 23-FEB-2028 maturity bond was the best performer with a decrease in the yield of 30 basis points point, according to FSDH Capital while the 14-MAR-2024 maturity bond was the worst performer with an increase in the yield of 30 basis points. #Yields Steady After CBN Sells OMO Bills Worth N40 Bln
