CBN Cuts Rate on Mid Tenor Bills at Open Market Operations
With the expectation to partially refinance its maturing instruments, the Central Bank of Nigeria (CBN) reduced the spot rate on open market operations (OMO) bills, wherein the monetary authority offered N600 billion to investors for subscription.
Inflow totalling ₦984.22 billion from OMO bills maturity hit the financial system on Tuesday. To regularise the liquidity in the financial system, the authority conducted a primary market auction at the beginning of the week across mid tenors.
The money market would have been awash with liquidity in the absence of OMO bills auctioned to keep the system funding level tight and reduce excess cash in the economy. At the auction offered to eligible market players, the CBN’s N600 billion offer was split across the 106-day to maturity OMO bills and 169-day to maturity instruments.
The auction recorded strong demand, which allowed the CBN to reduce the spot rate on 106-day to maturity OMO bills papers and hike the rate on 169-day papers, according to auction results. The authority has been gradually reducing its spot rate offer on bills to reduce balance sheet costs.
Yield-seeking investors at the auction staked N1.14 trillion in OMO bills papers across the two mid-tenor maturities. But the CBN allotted N1.13 trillion. The spot rate for 106-day OMO bills was reduced by 18 basis points to 23.59%.
Meanwhile, the spot rate for 169-day bills to maturity OMO paper climbed by 52 basis points to 24.50%. Post-auction trading activities, traders at Erad Partners Limited said the 11 Nov OMO Bill was quoted at 24.35/24.20 in the market.
Last week, at the Open Market Operation (OMO), bullish sentiment was sustained across the curve as average yields decreased by 38 bps, closing at 26.51% week on week. The short, medium, and long segments yield decreases of 20 bps, closing at 27.59%; 44 bps, closing at 26.35%; and 39 bps, closing at 26.37%, separately. Tinubu Seeks Senate Approval of 2025-2026 External Borrowing Plan of $21.5bn
