By Dipo Olowookere
The Central Bank of Nigeria (CBN) on Thursday auctioned some of its bills to foreign investors and banks in the country via the Open Market Operations (OMO). The liquidity management instrument was offered in three different tenors by the apex, but it eventually allotted only two.
Business Post reports that the bills were offered in 96-day, 187-day and 362-day, but only short-dated and long-dated maturities were issued, with the mid-dated instrument returned as No Sale because market participants did not bid for it.
The central bank had offered to sell N50 billion worth of the three-month bill, N100 billion worth of the six-month bill and N250 billion worth of the 12-month bill, making a total of N400 billion.
However, results of the exercise showed that appetite of investors to the instruments was low despite the stop rates at double digits unlike the treasury bills sold by federal government of Nigeria, which sells for as low as 6.50 percent.
Business Post reports further that for the allotments, the CBN sold the N980 million worth of the 96-day tenor and maintained the stop rate at 11.50 percent, while it sold N189.84 billion worth of the one-year bill with the rate left at 13.30 percent.
This indicated that from the N400 billion worth of the OMO bills auctioned by the central bank yesterday, only N190.82 billion was bided for and allotted, leaving the apex bank going home with N209.18 billion worth of unsubscribed bills.
If the participation continue to remain low, we foresee the apex bank jerking up the rates to attract interests.
However, Moody’s according to a report by Business Post on Thursday, has faulted this style of the central bank to boost the nation’s reserves, warning that it is dangerous. READ IT HERE
Meanwhile, at the money market on Thursday, rates further declined on the back of inflows from OMO maturities of about N508 billion. At the close of business, the average rate went down by 0.18 percent to settle at 3.18 percent.
It was observed that during the session, the Open Buy Back (OBB) rate depreciated by 0.21 percent to 2.79 percent from 3.00 percent, while the Overnight (OVN) rate fell by 0.14 percent to 3.57 percent from 3.71 percent.
