By Dipo Olowookere
The Central Bank of Nigeria (CBN) floated an OMO auction on Thursday, offering N75 billion worth of the debt instrument to investors at the market.
However, when subscriptions for the exercise were compiled, subscribers offered N398.6 billion more than what was auctioned by the apex bank.
Business Post reports that the total worth of the subscriptions was N473.6 billion, amounting to 631 percent subscription rate.
But at the end of the exercise, the central bank allotted the N75 billion worth of the OMO bills it initially offered to sell at the auction, with the stop rates maintained across the maturities as they were at the previous OMO auction.
A breakdown of the exercise showed that N10 billion worth of the 91-day instrument was offered for sale with N41.19 billion staked and N10 billion allotted at 11.40 percent.
For the 182-day bill, the CBN offered N15 billion for sale, but got offers worth N56.43 billion, but N15 billion allotted at 11.84 percent.
At the session, N50 billion worth of the 364-day instrument was auctioned to investors, but offers worth N377.45 billion were received by the CBN and N50 billion eventually allotted at 12.25 percent.
Generally yesterday, the treasury bills market traded on a relatively flat note as a result of the OMO auction, which relaxed demand interests.
According to analysts at Zedcrest Research, “Despite the auction stop rates clearing 10 percent above current market levels, we expect the market rates to remain relatively stable, due to the significantly large amount of unfilled bids at the auction.”
Meanwhile, rates in the money market were slightly higher by 3 percent as dealers reacted to the OMO announcement by the CBN.
The Open Back Buy (OBB) and the Overnight (OVN) rates consequently ended the session at 6.29 percent and 7.00 percent, with system liquidity currently estimated at N180 billion positive.
“We expect rates to trend higher tomorrow, as banks fund for the biweekly retail FX sales by the CBN,” Zedcrest Research said.
Adedapo Adesanya