CBN Sells N5.32trn OMO Bills, Foreign Investors Chase Rates
The Central Bank of Nigeria (CBN) raised about N5.32 trillion across three open market operations conducted last week. The auctions floated attracted substantial subscription as elevated rates continue to attract foreign portfolio investors into Nigerian markets.
Based on reports reviewed by MarketForces Africa, Nigerian OMO bills totalling N5.318 trillion were sold to banks and foreign portfolio investors across short-term tenors as part of efforts to mop up excess liquidity and drive FX inflows into the market.
The authority also floated treasury bills paper worth N570 billion for subscription at its midweek auction. At the auction, the CBN offered bills worth N570.00 billion across standard tenors.
Nigerian Treasury bills with 91 days maturity worth N100.00 billion was offered to investors for subscription. The offer also includes N120.00 billion for the 182-day treasury bills , and N350.00 billion for the 364 days bills.
Analysts at Cordros Capital Limited said total subscription moderated to N1.06 trillion from N1.59 trillion at the previous auction, indicating a bid-to-offer ratio of 1.9x, down from 5.9x.
Investors staked N1.064 trillion on the offer size due to strong appetite for the naira assets with the expectation that inflation will maintain a downward trend.
Reflecting appetite for duration, the total subscription of Nigerian Treasury bills that will expire in 364 days came at N986.33 billion as against N350 billion that was offered for sale.
Out of the amount, the CBN allotted one year bills worth N503.30 billion to investors at the spot rate of 15.77%, a sharp decline from 16.78% at the last auction in Q3. .
At the belly, the CBN sold N41.33 billion worth of 182 days bills at the rate of 15.25%, down from 15.30% as investors’ aggregate subscription of N52.12 billion surpassed the offer size of N120 billion.
With a N25.37 billion allotment, Nigerian Treasury bills that will expire in 91 days was priced at 15%, the same spot rate as at the previous auction, as total subscription reached N25.97 billion at the midweek auction.
The CBN also conducted an OMO auction on October 6, offering N600.00 billion worth of bills. Total subscriptions reached N4.13 trillion, representing a bid-to-offer ratio of 6.9x.
Eventually, only N998.10 billion was allotted, with stop rates of 20.08%, 20.13%, and 20.17% on the 85 days, 99 days and 120 days maturities, respectively.
Again, the market welcome another OMO auction where another N600.00 billion was offer on Oct 7. The auction drew subscriptions of N4.43 trillion, with N3.04 trillion allotted,
Breakdown showed that the authority sold N1.34 trillion for the 168 days to maturity and N1.70 trillion for the 196 days to maturity at stop rates of 19.45% and 19.49%, respectively. The CBN ended the week with another OMO auction on Friday, offering N600.00 billion worth of bills.
Total subscriptions reached N2.08 trillion, representing a bid-to-offer ratio of 3.5x and a total of OMO bills worth N1.28 billion was allotted. The authority priced 81 days OMO bills at 19.35%; 190-day bills was sold to investors at a discount rate of 19.39% and 151 days paper attracted a 19.44% spot rate.
With system liquidity expected to remain ample, demand for bills is likely to remain strong, reinforcing the ongoing moderation in yields, Cordros Capital told investors in an update. Nigeria Bonds Yield Sinks to 16% on Broad-Based Demand
