CBN Raises N3.8trn in OMO Bills Sales to Banks, FPIs
The Central Bank of Nigeria (CBN) sold N3.83 trillion OMO bills to investors across two open market operations to reduce excess liquidity in the financial system.
The banking system liquidity softened marginally, declining 1.69% week on week to N4.71 trillion from N4.79 trillion in the prior week, investment banking firms said in separate reports.
Deposit Money Banks’ and foreign portfolio investors’ (FPIs) total subscriptions for the two OMO bill sales floated were about N4 trillion, reflecting a strong appetite for elevated OMO bill yields in Nigeria’s financial market.
Due to a liquidity mop-up, short-term benchmark interest rates closed on a mixed note, with the open repo rate (OPR) remaining steady while overnight lending rates (OVN) surged.
Data from the FMDQ platform showed that the OPR held steady at 22.00%, while the OVN edged up to 22.16% from 22.10% at the close of the trading session last week.
At the main auction, the CBN offered N600 billion across the 8-day and 134-day OMO bill tenors.
Demand was firm at N1.69 trillion, with the full offer amount allotted. Investors’ interest was heavily skewed towards the longer end, with the 134- day bill drawing nearly N1.60 trillion in bids against an offer size of N300 billion.
In its report, Coronation Merchant Bank research subsidiary said this reaffirms the market’s continued preference for longer-dated paper. Stop rates settled at 21.89% p.a. and 20.02% p.a. for the 91-day and 134-day tenors, respectively.
The CBN held a second auction on Thursday, offering a further N600 billion across the 110-day and 138-day tenors, which cleared at 20.38% and 19.98% per annum, respectively.
Demand held firm, with N2.27 trillion in subscriptions recorded and N2.14 trillion allotted. Sentiment in the secondary market was broadly bearish across the fixed income space.
