CBN Sells N3.3trn OMO Bills to Banks, Foreign Investors
The Central Bank of Nigeria (CBN) sold OMO bills worth N3.3 trillion across two major open market operations to tighten liquidity in the financial system, according to auctions that slowed last week.
The Apex Bank recorded significant oversubscription above its offer size, reflecting banks’ and foreign portfolio investors’ continued positioning in high-yield investment securities.
Despite the actions, liquidity conditions improved instead due to additional inflows, which kept the short-term benchmark interest rate movement in check.
The overnight lending rate dipped as money market liquidity increased, despite a significant open-market operation withdrawal from the financial system. However, the open repo rate was unchanged.
System liquidity remained robust over the past week, rising to N5.67 trillion, from N4.96 trillion the previous week, Coronation Merchant Bank said in a research note.
The boost was primarily driven by N2.71 trillion inflow from matured OMO bills. Consequently, the Overnight Rate (OVN) declined modestly by 11 basis points week on week to 22.19%, while the Open Repo Rate (OPR) held firm at 22.00%.
The CBN sustained its aggressive liquidity management posture via two OMO auctions last week, offering N600 billion in bills across the 8-day and 134-day tenors.
Investor appetite was notably strong, with total subscriptions reaching N1.71 trillion, a bid-to-offer ratio of 2.9x, and total allotments of N1.70 trillion.
Stop rates cleared at 21.90% and 19.97% on the respective tenors. The Bank effectively met demand on the shorter end, fully allotting N1.07 trillion on the 8-day.
Similarly, at the Thursday auction, the CBN offered N600 billion across the 33-day, 75-day and 96-day tenors. Demand remained robust, with total subscriptions of N1.64 trillion and allotments of N1.60 trillion, with stop rates settling at 21.57%, 20.63% and 20.45% respectively.
Cumulatively, the CBN sterilised about N3.30 trillion across both operations, underscoring the persistence of its liquidity tightening measures, Coronation confirmed.
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