Awash of liquidity, OBB and OVN rates trend downward; T- Bills marker bullish


In the money market, the Open Buy Back (OBB) and Overnight (OVN) rates declined week on week due to an increase in system liquidity attributable to OMO and Treasury bills repayments in the system. The OBB and OVN rates declined at the start of the week on Tuesday, down 3.8ppts and 3.7ppts to close at 3.3 percent and 4.4 percent respectively relative to 7.2 percent and 8.1 percent recorded in the prior week. This is attributable to the spillover effect of CBN OMO repayment of about N177.3 billion which increased the total system liquidity to N666.6 billion from N459.7 billion in the prior week. Similarly, the OBB and OVN rates further declined by midweek to 2.7 percent and 3.3 percent respectively following increase in total system liquidity to N684.2 billion.
However, the trend was reversed by Thursday as the OBB and OVN rates inched up to 4.8 percent and 5.3 percent respectively following a massive OMO mop-up of N748.7 billion which was necessitated by a 95.9 percent (N528.9 billion) surge in system liquidity to N1.3 trillion. At the OMO auction, the CBN issued 91-day (Offered: N200.0 billion, sold: N63.9 billion) and 245-day (Offered: N500.0 billion, Sold: N684.8) instruments at 12.5 percent and 14.3 percent respectively. At the close of the week, the OBB and OVN rates closed lower, down 3.7 percent and 4.0 percent respectively as system liquidity closed at N1.2 trillion.
In the Treasury Bills market, performance was largely bullish as average rate across tenors traded lower on 3 of 4 trading days. At the opening of the trading week on Tuesday, the Treasury Bills market was bullish as the average rate across benchmarks fell 22bps to 13.62 percent. By midweek, this bullish trend continued as the average rate across benchmark tenors marginally declined 2 basis points further to 13.60 percent and 4 basis points on the subsequent trading day to close at 13.56 percent. However, the CBN carried out a Primary Market Auction (PMA) where the 91-day (Offered: N9.5 billion, Subscription: N10.0 billion, Allotted: N9.5 billion), 182-day (Offered: N47.6 billion, Subscription: N20.4 billion, Allotted: N17.6 billion) and 364-day (Offered: N38.1 billion, Subscription: N173.9 billion, Allotted: N68.1 billion) were allotted at stop rates of 11.75 percent, 12.70 percent and 13.04 percent respectively.