CBN Issues N3.5trn OMO Bills to Banks, Foreign Investors
The Central Bank of Nigeria (CBN) issued N3.5 trillion worth of OMO and Nigerian Treasury bills to investors across two primary market auctions, results revealed.
The core players in the OMO bills auctions, local deposit money banks and foreign portfolio investors displayed their love for the naira curve, supported by positive real return on investment.
The real interest rate has widened to 11.85%, as the monetary authority chases the headline inflation rate of 15.15% while keeping the key interest rate at 27%.
With successive downward repricing of spot rates in the Treasury bills segment, there is a signal that the authority has started scaling bank risk premiums on its issuance.
The Apex Bank stepped into the money market to mop up excess liquidity levels in the financial system, noting an additional influx of repayments from expired securities.
Market reports showed that financial system liquidity opened at N4.68 trillion last week, largely supported by strong placements at the Standing Deposit Facility.
AAG Capital reported that the CBN intervened in the money market to absorb excess liquidity by issuing a total of ₦1.2 trillion OMO instruments.
Total allotment hit ₦3.65 trillion, following a subscription of ₦4.42 trillion across both auctions. The stop rate settled at 19.48% on the 99D, while it settled at 19.44% on the 105D bill.
Similarly, the Nigerian Treasury bills auction held on Wednesday offered a total of ₦1.15 trillion across the curve. Significant demand was recorded on the 365-day bill.
Total subscription came in at ₦4.07 trillion against ₦800 billion offer.
Consequently, the stop rate declined by 109 bps compared to the previous auction, settling at 15.90%. The bullish auction drove most market activity for the rest of the week, as yields across all instruments repriced lower. Treasury Bills Yield Falls as Investors Refill Lost Auction Bids
