The Central Bank of Nigeria (CBN) redeemed matured open market operations (OMO) obligations to the tune of N423.8 billion in the week ending 16 November, 2018. This helped to boost banking sector liquidity.
However, the CBN floated one OMO auction to keep liquidity level in check. At the T-bills Primary Market Auction (PMA), the CBN offered N3.4bn, N16.9bn and N107.9bn worth of the 91-day, 182-day and 364-day instruments at stop rates of 10.95%, 13.2% and 14.5% and 4.5 percent respectively.
Investors sustained Interest due to rising short term rates. At the start of the week, financial system liquidity declined from the prior week and this was sustained till midweek following a Treasury Bills (T-bills) auction held on Wednesday, before an OMO maturity of N423.8bn hit the system which boosted overall liquidity.
While each of the instruments was oversubscribed, the apex bank issued the exact amount on offer and investors took advantage of the OMO auction held on Thursday, with the bulk of the subscription centred on the longer tenor instrument.
At the auction, the 77-day (Offer: N50.0bn, Sale: N0.06bn), 182-day (Offer: N100.0bn, Sale: N44.5bn) and 364-day (Offer: 300.0bn, Sale: N405.9bn) instruments were issued at marginal rates of 11.5%, 13.0% and 14.5% respectively. The 77 and 182– day instruments were significantly undersubscribed, while the 364-day instrument was oversubscribed by 1.4x due to the relatively attractive rate on the instrument.
Consequently, the Open Buy Back (OBB) and Overnight (OVN) rates opened the week at 6.1% and 7.0% respectively – higher than 4.3% and 5.0% on the preceding Friday – as system liquidity declined from N664.4bn to N555.3bn. Rates trended lower to 5.7% (OBB) and 6.6% (OVN) on Tuesday, but trended higher for the rest of the week, settling at 6.3% and 7.2% – up 2.1% and 2.2% W-o-W respectively.
Similarly, average T-bills rate closed the week at 13.1%, up 22bps W-o-W following sell Summary of Equities Market Activity for the Week NSE All Share Index vs. Market Capitalization Performance of Equities Market Sectoral Indices for the Week