OMO Bills Yield Falls as Banks, FPIs Boost Holdings
The average yield on OMO bills fell by 9 basis points in the secondary market to close at 22.4%, fixed income market analysts said in a report. The yield on OMO bills declined as local deposit money banks, and foreign portfolio investors (FPIs) boosted their holdings.
Last week, the Central Bank of Nigeria (CBN) conducted an OMO auction on Thursday, offering instruments worth N600.00 billion across two maturities. The offer was split into N300.00 billion for the 355 days and N300.00 billion for the 362 days to investors at the primary market auction.
According to auction results, total subscription settled at N1.88 trillion, translating to a bid to offer ratio of 3.1x. The monetary authority allotted N1.68 trillion to investors, split into N725.70 billion for the 355 days and N951.20 billion for the 362 days bills. Spot rates on OMO bills also declined, reflecting sustained efforts to reduce Nigeria’s debt costs.
Stop rate for 365 days to maturity OMO bills fell to 19.19%, from 23.95%. Also, spot rate for 362 days to maturity declined to 19.45% from 23.98% at the previous auction in February.
Last month, the CBN conducted only one OMO auction, reflecting a deliberate reduction in liquidity tightening measures, Erad Partners limited said in a macro update.
The firm explained that the absence of aggressive OMO issuance played a critical role in the 400bps drop in yields, as excess liquidity remained in the system, fueling demand for fixed-income securities #OMO Bills Yield Falls as Banks, FPIs Boost Holdings Broadstreet Tempers Stocks Buying as Interest Rate Runs Ahead Inflation
