Interest Rates on Nigerian OMO Bills Crash Below 18%
The spot rates on Nigerian OMO bills have been slashed below 18%, according to details from the Central Bank of Nigeria (CBN) open market operation on Thursday.
The sharp downward repricing of spot rates followed the monetary policy authority’s decision to adopt an expansionary policy, having funded a tolerable inflation position at 15.39%.
The CBN committee axed Nigeria’s benchmark interest rate by 3.50% to 23% at the Sept meeting, a decision that shifted sentiment and the direction of yields in the fixed income market.
With approximately N7.5 trillion in excess liquidity in the financial system, the authority floated an OMO bill auction, offering three tenors for investors’ subscription.
The Apex Bank offered N1.0 trillion in OMO bills for sale across the 68-day, 152-day, and 180-day maturities. The auction was oversubscribed, supported by excess credit balance in the money market at the opening of the bids.
Investors’ subscription amounted to N6.1 trillion, with the strongest demand recorded on the longest-dated bill. With a total allotment of N2.25 trillion, investment firm CardinalStone Securities Limited reported there was no sale for the 68-day OMO bill at the auction.
However, the Apex Bank allotted N939.6 billion and N1.32 trillion for 152-day and 180-day bills, respectively. Stop rates settled at 17.29% and 16.99% for the 152-day and 180-day bills, respectively – a sharp decline from the Apex Bank previous pricing. CBN Targets N500 bln from Treasury Bills Auction Midweek
