CBN Slashes Rates on Nigerian OMO Bills, Raises N2.88trn
The Central Bank of Nigeria (CBN) axed spot rates on Nigerian OMO bills across standard tenors at the primary market auction floated on Tuesday.
To manage excess liquidity in the financial system, the CBN offered a total of ₦1.00 trillion across three tenors to retail and foreign portfolio investors and deposit money banks.
The authority floated N200 billion worth of 91-day OMO bills, 147- and 154-day instruments totalling N400 billion each for subscription.
The auction attracted N5.498 trillion in total subscriptions for the three tenors – the 154-day tenor OMO bill singularly attracted N3.830 trillion.
However, CBN allotted N2.880 trillion in total. The 154-day paper, which had the highest demand, was allotted N1.969 trillion against the initial ₦400 billion on offer.
Investment firm Herwood Securities Limited said stop rates cleared at 19.59% for the 91-day paper, and 18.99% each for the 147-day and 154-day papers.
Fixed income market analysts acknowledge that OMO rates continued their downward trend from last week into the current week.
The 1 December paper cleared at 19.90% on 26 August, eased to 19.85% on 27 August, and fell further to 19.59% at Tuesday’s auction, a cumulative decline of 31 basis points in under a week.
Herwood Securities Limited reported that the 26 January paper moved even more sharply, falling from 19.32% on 27 August to 18.99% today, representing a total decline of 33 basis points.
Market analysts said post-auction, the 1 December OMO was offered at 18.85%. The 2 February OMO traded at 18.60%/18.50%, while the 26 January OMO was initially quoted at 18.70%/18.60% before closing at 18.80%/18.65%.
Overall, the session reflected a strong demand for OMO securities, while activity in Treasury bills remained subdued ahead of the midweek auction. Huge Funds Chase Nigerian OMO Bills in Search for 21% True Yield
