CBN Sells N1.25trn OMO Bills at Reduced Interest Rate
The Central Bank of Nigeria (CBN) floated a primary market auction on Wednesday where it allotted OMO bills worth N1.25 trillion to successful investors, foreign and local, at a lower interest rate of 21.99%.
As part of an effort to manage excess liquidity in the financial system, the CBN offered investors the opportunity to pile up cash on N600 billion worth of OMO bills. via competitive bids.
Details of CBN open market operations showed that the authority opened an offer for 272-day maturity bills worth N300 billion and 363-day maturity bills of another N300 billion. Due to reduced fixed interest instrument supply in the market, demand was stronger as banks and offshore investors submitted N2.174 trillion in bids for the N600 billion offering.
The eligible investors showed preference for long-dated bills, and the tenor attracted significant subscription that forced the CBN to look the other way on mid-tenor offers. Analysts also noted the significant subscription afforded the CBN an opportunity to reduce its balance sheet costs.
The CBN allotted N1.25 trillion worth of OMO bills to investors at a stop rate of 21.99% on the 363-day bill with no allotment at the 272-day maturity. Reflecting the changing market narrative, spot rates on Nigerian OMO bills has declined from a peak of 24.65%. Nigeria Bond Yield Sinks Below 17%, Subsidy Savings Ease Offer
