IN the new week, the Central Bank of Nigeria (CBN) will auction Treasury-bills worth N125.24 billion. The instruments include: 91-day bills worth N4.38 billion, 182-day bills worth N12.92 billion and 364-day bills worth N107.94 billion.
However, dealers from Cowry Assets Management Limited said they expect the corresponding stop rates to decline marginally as demand for the instruments increase following the CBN ban of individuals, local firms and non-bank financial institutions from participating in open market operations (OMO) auctions.
Meanwhile, the Naira government bonds have dropped 117 basis points to 13.03 per cent since the central bank moved to block individuals and non-bank firms from buying open-market operations (OMOs), on Oct. 23, according to Bloomberg indexes.”
The yield could fall as low as 12 per cent in coming weeks, Bloomberg quoted Omotola Abimbola, an analyst with Lagos-based Chapel Hill Denham Securities Ltd as having said. By contrast, OMOs maturing in October next year yielded 14.58 per cent on Thursday.
No one is too powerful for me to control — Buhari
OMOs, which typically have maturities of less than a year, were originally used by the central bank to control liquidity and mainly bought by local lenders. But the market had been opened to other investors in the past two years to bring in the hard currency needed to keep the naira from depreciating, and OMOs became one of the main instruments used by foreign carry traders.
The OMO restriction is intended to discourage banks from giving loans to customers who will use them to buy high-yielding government securities, according to the central bank. It is one of tbe recent rules aimed at forcing banks to extend more credit to manufacturers and help spur growth in an economy that’s struggling to recover fully from a 2016 contraction.
The Abuja-based central bank sold N224.5 billion ($619 million) of OMO bills due November 3, 2020 at a yield of 13.3 per cent, during an auction this week.