CBN Hikes Interest Rates on OMO Bills to Keep Foreign Investors
To keep foreign portfolio investors (FPIs), the Central Bank of Nigeria (CBN) has increased spot rates on OMO bills by more than 300 basis points across two tenors, details from its late primary market auction conducted on Friday revealed.
As part of its monetary authority programme, the CBN opened N500 billion worth of OMO bills for subscription, having scaled back supply to once per month since the beginning of the year.
The offer was split into N250.00 billion for OMO bills with 298-day maturity and N250.00 billion for bills with 319-day maturity—to investors.
The auction result cited by investment banking firms revealed that total subscription was much higher, as foreign portfolio investors began to rotate into the Nigerian market after a brief disruption caused by demand for safe haven assets.
Investors staked N1.39 trillion on the amount opened for subscription by the authority, resulting in a bid-to-offer ratio of 2.8x. The CBN allotted OMO bills worth N1.01 trillion, beating its own target at the oversubscribed auction.
Further details revealed that out of the total allotment made, the CBN allocated N319.54 billion for the 298-day OMO bills maturity and N688.30 billion for the 319-day OMO bills maturity.
The stop rate on 298-day surged by 3.18% to 22.37%. At the same time, the spot rate for 319-day OMO bills rose by 3.28% to close at 22.73%. Meanwhile, the CBN hacked the interest rate on Treasury bills at its midweek auction, suggesting an intention to keep foreign inflows into the market stronger than in Q1. IMF Warns Global Public Debt Rising to Historic Levels
