CBN Raises N1.7trn from OMO Bills Sales to Banks, FPIs
The Central Bank of Nigeria (CBN) conducted an open market operation on Monday, offering N600 billion in OMO bills across three tenors: 8-day, 99-day, and 120-day.
The offer was made to deposit money banks (DMBs) and foreign portfolio investors (FPIs), the key eligible market participants at the auction.
This auction aimed to reduce excess liquidity in the financial system and address expectations of additional OMO repayments.
Reflecting a strong demand for the attractive yields, total subscriptions reached N1.9 trillion at the primary market auction conducted by the monetary authority.
Ultimately, the CBN allotted a total of N1.7 trillion at stop rates of 21.90%, 19.89%, and 19.94%, respectively, across the short tenors.
At the close of the trading session last week, the liquidity in the financial system stood at a net surplus of ₦5.93 trillion, down from ₦8.24 trillion, mainly due to outflows from primary market settlements.
In simpler terms, although there is still a significant amount of cash in the system, some of it was used as investors purchased securities at the auction.
Market analysts highlighted that the CBN has absorbed approximately N6 trillion in the last three auctions, as the money market approaches the end of the first quarter with excess liquidity.
The CBN offered a total of N1.20 trillion across two OMO auctions last week. Investor interest remained strong, consistent with previous auctions, as total bids increased to N4.77 trillion, a 78.14% rise from the prior auction.
Allotments reached N5.17 trillion, resulting in bid-to-cover and bid-to-offer ratios of 0.92x and 3.97x, respectively. Stop rates were stable, settling at 21.90% per annum for the 8-day bill and 19.79% per annum for the 113-day bill. Naira Drops to N1,383, NFEM Interbank Turnover Reduces
