OMO Bills Worth N33bn To Mature This Week
OPEN Market Operation (OMO) bills worth N33bn are expected to mature this week.
The Treasury bills secondary market started the second quarter of 2019 on a bullish note largely buoyed by increased system liquidity from the Federation Account Allocation Committee injection almost two weeks ago.
As the Central Bank of Nigeria resumed its aggressive liquidity mop-ups through OMO auctions after a one-week break, average yields across all tenors shed marginally by two basis points week-on-week to settle at 13.4 per cent from 13.6 per cent the previous week.
Demand was witnessed largely on the short- and medium-term bills causing yields to drop by 60bps and 20bps week-on-week, respectively, while the long-term bills advanced by 11bps week-on-week as sell-offs were experienced on the 02-JAN-20 and 23-JAN-20 bills.
Last week, the apex bank also offered a total of N350bn in two OMO auctions. At the first auction on Tuesday, N200bn was offered across the 86-, 153- and 364-day bills, while on Thursday, N150bn was offered across the 203- and 364-day bills.
Investors exhibited preference for longer- tenor OMO instruments, which recorded 2.1x over-subscription while the short- and medium-term were under subscribed by 0.6x and 0.1x, respectively.
In addition, the CBN offered N95.7bn worth of bills across 91-, 182- and 364-day tenors at the primary market auction on Wednesday last week with a total bid-to-cover ratio of 2.1x and stop rates inching by 40bps and 51bps on medium- and long-term bills in tandem with the secondary market levels.
The bills were all oversubscribed, however, only the long-term bill was fully allotted while the 91-day and 182-day bills received 0.5x and 0.8x allotment, respectively.
Analysts at Afrinvest Securities Limited said going into this week, they expected yields to remain high on the back of tightened liquidity and the possibility of a CBN mop-up exercise as OMO maturities worth N33bn were expected to hit the system.
“Investors are advised to take advantage of medium to long-term bills with attractive yields,” they said.
In the bond market, performance was bearish as average yield advanced by 14bps week-on-week to settle at 14.1 per cent last week due to sell-offs experienced across all segments of the curve.
However, it intensified in JAN-22, FEB-28 and NOV-28 maturities whose yields advanced by 38bps, 38bps and 37bps, respectively.
Last week, the Debt Management Office released the Federal Government bonds issuance calendar for the second quarter of 2019 where it announced to issue its first 30-year bond.
“We anticipate quiet trading sessions in the bond market this week as investors trade cautiously, awaiting clear policy directions,” analysts at Afrinvest said.