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CBN auctions N200bn treasury bills

By on June 3, 2014

The Central Bank of Nigeria (CBN) last week sold treasury bills worth N200 billion through its Open Market Operations (OMO) instrument.

In fact, the central bank continued to mop up liquidity with the issuance of OMO bills in all the trading days last week. The market did not open last Thursday because the public holiday declared to commemorate the democracy day in the country.
The instrument was auctioned at an average stop rate of 10.8 per cent.

However, the market recorded inflow of N238 billion into the system from matured OMO bills as well as funds from SURE-P.

Conversely, N266.0bn was debited from the system for the Retail Dutch Auction System (RDAS) and OMO.

The interbank money market opened with a credit balance of N423 billion and closed with a higher credit balance of N521 billion.
During the week, according to a report by Afrinvest Securities Limited, the interbank system was liquid with an average liquidity of approximately N460 billion, compared to the N346.5 billion recorded the preceding week.

The 30 days and 60 days month rates gained 15 basis points and 17 basis points to close at 10 per cent apiece, while the 90 days, 180 days lost the most by 65 basis points and 47 basis points to 10.9 per cent and 11.6 per cent respectively.

This week, despite the planned debit of cash reserve requirement, analysts anticipate that the CBN would issue OMO bills to mop up the increased liquidity and expected maturity of N239 billion.

Forex Market
The CBN offered a total of $700 million at the RDAS. A breakdown of this showed that $400 million was offered last Monday while $300 million was offered at last Wednesday auction respectively.
A total of $365.1 million was sold at the Monday auction, while $244.4 million was sold at the Wednesday auction. The marginal rate at both auctions was at N155.73/$1. The CBN reduced the amount offered at the RDAS by $50 million.
This may be associated with the reduced dollar demand and net inflow in the economy.
But the naira lost 30 kobo at the interbank segment of the forex market to close at N162.75/$1 from N162.45/$1, while the Bureau De Change (BDC) and parallel market segments closed flat at N167/$1 apiece.

Bond Market Review and Outlook
Trading activities in the bond market was active and the activity level was sustained all through the week. Activities during the week were predominantly driven by the bears as investors took profit, reversing the consistent decline in yields within the last two months, Afrinvest Securities explained.
Yields increased by an average 20 basis points to an average of 12.3% from 11.8% the preceding week. The 15.1% FGN APRIL 2017 instrument gained 70 basis points followed by the 13.05% FGN AUG 2016, 9.35% FGN AUG 2017 and 10.7% FGN MAY 2018 with 60 basis points a piece.
Despite the mild rise in yields, the yields were unattractive and responsible for the recent bullish trend experienced within the equity market.
According to Afrinvest, this also buttressed the likely portfolio rebalancing in favour of the equity market.

Additionally, last week’s trading session terminated at the end of the month and therefore dealers with statutory limits i.e. Pension Funds Administrators may be required to cover positions.
The Debt Management Office is scheduled to reopen the 13.05% FGN AUG 2016 and 14.2% FGN MAR 2024 instruments early this month.

Chief Compliance Officers
The CBN last week directed all Deposit Money Banks (DMBs) and discount houses in the country to ensure that no chief compliance officer (CCO) is below the grade of a general manager without its prior approval. According to the letter signed on behalf of the Director of Banking Supervision by K.O. Balogun, available information had revealed that chief compliance officers of some banks and discount houses are below the grade of general manager without its prior approval. The CBN noted that equally worrisome was the fact that most CCOs do not report directly to the board of directors of their respective institutions. This, it stressed, was a flagrant disregard to extant laws and regulations on the subject.

Pensions Assets
Chairman, Pension Fund Operators Association of Nigeria (PenOp), Mr. Misbahu Yola last week said the total pension fund assets has increased to about N4.3 trillion from about N4.1 trillion in the first quarter of 2014.

Speaking in Abuja, he said the contributory pension scheme currently has six million contributors. He noted that the pension reform Act 2004 was arguable the most critical step direction in reposition the industry. The acting Director- General, National Pensions Commission (Pencom), Mrs. Chinelo Anohu-Amazu, said the summit which would have 55 African countries in attendance would help shape the industry conversation within the next decade as it is expected to attempt to address present shortcomings and other problems related to pensions.

 

 

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One Comment

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