CBN Raises N1.205trn from OMO, Treasury Bills, Rejects Bids
The Central Bank of Nigeria (CBN) raised N1.205 trillion from open market operation and Nigerian Treasury bills auctioned to investors, according to update obtained by MarketForces Africa.
The authority floated OMO bills for subscription last week Tuesday followed with Treasury bills auction on Wednesday. At the mid-week Treasury bills auction, the CBN offered N480.00 billion across the Nigerian Treasury bills with 91 days, 182 days, and 364 days maturities.
These offers attracted strong subscription of N1.01 trillion, which translated to a bid-to-offer ratio of 2.1x, up from 1.7x at the prior auction – reflecting rising appetite for the naira assets.
Almost 93% of total bids were funnelled into the 364-day paper, as investors sought to lock in longer tenors amid elevated short-term funding rates and reinvestment risks. The auction results revealed that the CBN over-allotted N585.25 billion to investors and spot rates were adjusted excluding mid tenor.
The treasury bills with 91 days expiration was sold at 15.32%, 18 basis points below previous rate. For 182 day treasury bills, the spot rate settled at 15.50%, the same as previous auction. The CBN however hiked rate on one year or 364 days to maturity treasury bills by 25 basis points to 17.69%, a moderate effort to match rate pricing at the OMO bills market.
The upward adjustment at the long end signals the market’s willingness to price in tighter liquidity expectations ahead, even as the short end remains relatively anchored, analysts at Cowry Asset Limited said.
“We believe this signals front-end easing and a measured adjustment at the long end, where the pace of increases has slowed relative to prior auction”, Cordros Capital Limited said in a note.
Before the midweek Treasury bills auction, the CBN had floated OMO bills for subscription from eligible investors on Tuesday, maintaining efforts to drive FX inflows through foreign portfolio investors. The CBN offered N600.00 billion for 84 days OMO paper, which was oversubscribed at N1.18 trillion, translating to 2.0x bid-to-offer ratio.
Auction results revealed that the Apex bank allotted N620.65 billion worth of OMO bills to investors at a stop rate of 26.44%, underscoring the CBN’s continued liquidity sterilization drive at elevated yields. The market expects Nigerian Treasury bills yields to remain anchored in the near term, supported by sustained system liquidity and strong investor demand.
Overall, while robust subscription levels point to healthy appetite for sovereign paper, the interplay between liquidity sterilization and investor demand will keep yield movements relatively volatile across maturities. #CBN Raises N1.205trn from OMO, Treasury Bills, Rejects Bids Nigeria Bonds Yield Falls Amidst Widening Real Interest Rate
