Rates to trend higher despite N183.3bn OMO maturities

THERE are expectations that though, a total of N183.3 billion worth of Open Market Operation (OMO) maturities will hit the system, money market rates will be on the rise.

“We believe the apex bank will sustain its trend of liquidity mop ups and money market rates could trend higher,” dealers at Afrinvest said.

Similarly, the Central Bank of Nigeria (CBN) conducted an OMO auction worth N137.4 billion on Tuesday, issuing the 93-day (Offered: N150 billion, Sale: N3.8 billion) and 219-day (Offered: N200.0 billion, Sale: N133.6 billion) instruments at 11.1 per cent and 12.2 per cent respectively.

Notable, both instruments were under subscribed which is indicative of the investors’ reduced appetite for shorter tenored instruments.

Meanwhile, Nigeria plans to sell N1.05 trillion worth of treasury bills in seven auctions in the third quarter (Q1) of 2018, according to the CBN’s Treasury Bills Issuance Calendar, seen by  Nigerian Tribune.

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Specifically, the CBN would offer N44.86 billion in the three-month papers, N225.08 billion in the six-month bills and N782.47 billion in the one-year notes.

The planned treasury bills auction of N1.05 trillion in Q3 2018 represent an 8.92 percent increase over the N964.47 billion the CBN issued in the 2nd quarter of 2018, and a 13.5 percent decrease from the N1.214 trillion issued in Q1 2017

The bank issues treasury bills twice a month to help the government finance its budget deficit, curb money supply growth and provide an avenue for lenders to manage liquidity.

Early in May, the CBN released its Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2018/2019, wherein settlement banks were directed to provide a clearing collateral of not less than N15 billion in treasury bills to enable them to perform settlement roles.