Secondary Treasury Bills market to compress as N246bn OMO maturities boost liquidity


Strong indications have emerged that rates in the secondary Treasury Bills market will compress further on the back of higher demand as the Open Market Operations (OMO) worth N246.0 billion would hit the system.

The Treasury bills rate had fallen sharply since the CBN switched monetary policy from fighting inflation and attracting foreign portfolio inflows to boosting domestic credit. The CBN has frequently deployed heterodox policies over the years.
While making a case for buying interest in the equities market, analysts at Meristem Research had said they identified elevated system liquidity supported by incoming OMO maturities, depressed fixed income yields and a dearth of attractive alternative investment options.
The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr Oscar Onyema, had linked the stock market rally to CBN’s restriction of domestic investors from participating in its open market operations as well as the interest rate cut.
According to Onyema, investors are always in search of higher returns on investments, noting that central bank’s policies have made the stock market attractive to investors.
He said: “I must say that some of the policy changes I made reference to include the CBN policy that domestic institutional investors should stop participating in the OMO market. That has driven significant funds into the Nigerian Treasury Bills (NTB) market and some of those funds have found their way into the equities market. We have also seen a cut in interest rate. That was a significant move in support of equities as an asset class. What investors tend to do is to look for yield.”

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