CBN, Investors Close OMO Bills Sale at 24.3% Interest Rate
At an interest rate which reflects the current market dynamics, investors wanted more Nigeria’s OMO bills but the Central Bank of Nigeria (CBN) sold to match its total offer, keeping rate 6 basis points below previous offer at the auction.
At the primary market auction conducted on Friday, foreign portfolio Investors (FPIs) and local deposits money banks staked huge bets on Nigerian OMO bills.
With the aim to management excess liquidity and also drive FX inflows from foreign portfolio investors, the CBN offered N500 billion OMO bills to investors.
Total subscription which was concentrated on demand for long end OMO bills came at N908.23 billion.
Elevated yield on Nigerian assets has continued to be a major drive of oversubscriptions at the main auctions. The ongoing monetary policy tightening has nudged money rates higher due to multiyear high inflation conditions.
Despite the huge amount put forward to purchase the OMO bills, the CBN rejected the excess bids and sold N500 billion worth of instrument to investors. The CBN sold to match demand at a stop rate of 24.3%, according to CardinalStone Securities Limited.
In the first half of 2024, Nigeria saw significant foreign portfolio participation in money market instruments, with around 77% or $2.68 billion of foreign portfolio investments (FPIs) allocated to treasury bills, OMO bills, and commercial papers, Cowry Asset Limited said in a review note.
The investment banking firm said the CBN offered yields as high as 22.5% on treasury bills primary market auctions, while OMO bills yielded 22%, making these instruments among the most attractive in the market. #CBN, Investors Close OMO Bills Sale at 24.3% Interest Rate
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