Interest Rate on OMO Bills Drops by 37pbs
The apex bank reduced interest rates on the open market operation (OMO bills) following a surge in demand from investors who participated in the main auction conducted midweek.
In the secondary market, the average yield on OMO bills declined as investors filled lost bids in the secondary market.
The Central Bank of Nigeria (CBN) offered N500 billion across the standard maturities at the primary market auction. Demand was strong with a bid to offer coming at 2.39x bid. Naira Suffers Big, CBN Goes Ballistic Against FX Whale
The authority took advantage of the buoyant demand, allotting N676.65 billion. Stop rates across the 97-day, 188-day and 363-day instruments settled at 19.00%, 19.50%, and 21.13%, respectively.
Compared with the previous auction, spot rates on the short and mid curve were unchanged while the apex bank reduced the rate on 363-day OMO bills to 21.13% from 21.50%.
The offer was split as N75.00 billion for the 95-day, N75.00 billion for the 179-day, and N350.00 billion for the 363-day bills.
The total subscription level registered at N1.20 trillion with more interest on the longer-dated bills. Longer duration OMO bills attracted N1.16 trillion from investors seeking to park cash in government instruments.
The total bet put forward for long-tenor OMO bills accounted for 96.9% of the total subscription.
The auction closed with the CBN allotting N649.65 billion – N17.00 billion of the 95-day, N7.25 billion of the 179-day, and N652.40 billion of the 361-day instruments – at respective stop rates of 19.00% (unchanged), 19.50% (unchanged), and 21.13% (previously 21.50%).
