Rates to trade low as maturing $293.7bn OMO bills boost liquidity

There are expectations of high liquidity from maturing Open Market Operations (OMO)  worth $293.7billion which will keep rates suppressed.

A dealer, Zedcrest Capital in a note to clients said , “We expect to see more client-driven demand on OMO bills in tomorrow’s session, as market players continue to reinvest excess liquidity at their disposal.”

The Treasury Bills market continued to trade quietly, with client-driven axes being the order of the day, as most market players traded remotely due to the growing spread of the COVID-19 pandemic.

According to the firm, with OMO maturities of N75 billion flowing in and no liquidity mop-up by the Central Bank of Nigeria (CBN) via the OMO auction window, “we saw client demand across all tenors, with the mid-end of the OMO curve (Sept-20) being the cream of the crop, as buy pressure pulled yields to 14per per cent levels by the close of trading.”

It stated that yields compressed by an average of 240 basis points (bps) across the benchmark OMO curve.

Meanwhile, dealers said the Nigeria Treasury Bills (NTBs) saw average yield at to 3.5 per cent from the 4.3 per cent the previous week.

The one year instrument was the most demanded asset, resulting in average yield decline to 4.5 per cent (vs 5.6 per cent in the previous week).

Furthermore, the 91-day and 180-day bills fell to 2.2 per cent and 3.9 per cent from previous week’s close of 2.9 per cent and 4.5 per cent respectively.

 

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NIGERIAN TRIBUNE

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