By Dipo Olowookere
The Central Bank of Nigeria (CBN) has announced changes to the dates for maturity of the bills it sells to market participants via the Open Market Operations (OMO).
Business Post reports that the CBN regularly auctions the debt instrument to investors as part of its function to monitor the level of cash in the financial system as well as curb inflation.
When these bills are sold, they are usually redeemed or paid back to subscribers on Thursdays, but the apex bank has changed dates for payment of the OMO bills at their full cycle.
At the market yesterday, the central bank announced both OMO bills and the treasury bills would no longer be maturing on Thursdays like it used to be in the past. It said instead, the settlement for the OMO bills would now be on Tuesdays.
Business Post gathered that this new development came on the back of the recent directive from the central bank, barring local retail and institutional investors from buying OMO bills.
The CBN is charge of settlement of debts from OMO sale, while the federal government of Nigeria handles debts from treasury bills, which are sold to investors twice a month.
The directive from the apex bank had caused confusion at the market, prompting the Debt Management Office (DMO) to explain that investors were still free to buy T-bills without any restriction.
OMO bills are used by the central bank as a liquidity management tool. The bank uses it to control the amount of cash in the system by buying excess liquidity from investors in exchange of the bills.
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