Interest Rates on Nigerian OMO Bills Rise by 3.28%
As part of efforts to keep the naira assets attractive, spot rates on Nigerian OMO bills rose by more than 3% across standard tenors, details from a primary market auction (PMA) conducted by the Central Bank (CBN) showed.
At the OMO auction on Friday, local banks and foreign portfolio investors’ appetite for the naira assets surged sharply, reflecting an untamed appetite for elevated yields. The average yield on OMO bills fell by 109 bps to 27.1% in the secondary market due to bargain hunting on the naira assets.
The CBN conducted an OMO auction where the authority offered instruments worth N500.00 billion across two maturities. This offer was split into N250.00 billion for the 298-day maturity and N250.00 billion for the 319-day maturity—to investors.
Total subscription settled at N1.39 trillion, translating to a bid-to-offer ratio of 2.8x as banks and foreign investors continue to park funds in the CBN OMO bills. The Apex Bank doubled down on its target and raised N1.008 trillion, which was 73% of the aggregate subscriptions or bids submitted.
The CBN raised N319.54 billion for the 298-day maturity and N688.30 billion for the 319-day maturity. Further review of the auction results showed the authority rejected 27% of the investors’ subscriptions, which triggered demand for OMO bills in the secondary market.
The CBN leveraged excess subscription to raise more funds at the OMO bills auction but raised spot rates to keep foreign investors in the Nigerian markets amidst global contest for hot money.
The CBN offered 22.37% as the spot rate for OMO bills with 298 days maturity, up by 318 basis points compared with the discount rate at the previous auction. For OMO bills with 319 days maturity, the spot rate rose by 328 basis points to 22.73%. #Interest Rates on Nigerian OMO Bills Rise by 3.28% IMF Cuts Global Economic Growth Forecast to 2.8%
