CBN Raises N2.07 Trillion via Treasury, OMO Bills Auctions
The Central Bank of Nigeria (CBN) raised more than N2.07 trillion from the financial markets via Treasury, and OMO bills sales, details from the auctions results showed.
The OMO, and Treasury bills sales conducted by the monetary authority effectively sterilised more than N2 trillion from the financial market to eliminate risks of excess liquidity in the financial markets.
Nigeria’s double digit inflation rate is a downside to macroeconomic indicator performance as the CBN lost touch with price stability, worsened by naira’s negative fluctuations.
To compensate for hot red headline inflation, investors have continued to taking position on Nigerian borrowing instruments as a result of elevated yield on naira assets. The monetary authority opened the just concluded week with huge OMO sales to investors at the primary market auction on Tuesday.
The Apex Bank increased its appetite for OMO sales due to a huge bets received from local banks and foreign portfolio investors that participated at the auction. According to investment banking firms, the CBN allotted OMO bills worth N1.447 trillion to investors, though offered made was N300 billion.
Thereafter, on behalf of the CBN, Nigeria’s debt office also conducted Treasury bills auction sales as part of efforts to reduce excess liquidity in the financial system. At the midweek primary market auction, the Debt Management Office (DMO) offered N513.43 billion worth of Treasury bills to investors.
The midweek auction saw stop rates for the 91, 182, and 364-day papers rise compared to the previous auction, with the DMO selling more than allotted for the first time in a while. Investment firms reported that DMO allotted N626.33 billion to investors with expanded appetite for Nigerian borrowing instruments.
The allotment which was 22% higher than the amount on offer came at higher spot rates. Details from the auction results revealed that 364-day accounted for 97% of the total allotment. Stop rates rose across all tenors, increasing by 100bps for both the 91- and 182-day papers and by 235bps for the 364-day paper.
Last month, an early auction saw ₦81.9 billion offered with stop rates steady at 17.00%, 17.50%, and 19.864% for 91-, 182-day, and 364-day tenors, respectively, according to AIICO Capital Limited.
Analysts explained that later in October, a larger auction offered ₦374.669 billion, witnessing a rate increase on the 364-day bill to 20.65%. Foreign Investors Bet on Nigeria Eurobonds after Rates Cut
