Investors Buy N251bn OMO Bills at 13.28%

By Dipo Olowookere

The sum of N250.1 billion was mopped up from the financial system on Friday by the Central Bank of Nigeria (CBN), though less than the nearly N1 trillion inflows during the session.

Business Post reports that the mopping up was done by the apex bank via the sale of its liquidity management tool via the Open Market Operations (OMO). It had offered N150 billion worth of the instrument for sale, but it eventually allotted N250.5 billion to subscribers.

The bills were auctioned by the central bank in three maturities; N20 billion worth of the 88-day bill, N30 billion worth of the 179-day bill and N100 billion worth of the 361-day bill.

However, as it had been in the previous exercises, offshore investors were more interested in the long-dated tenor, staking N250.5 billion on the instrument and was eventually allotted at 13.28 percent, the same stop rate of the previous auction by the CBN.

For the two other maturities, the central bank declared ‘No Sale’ for them despite receiving bids worth N5 billion for the mid-tenor bill from investors yesterday. There was no offer received for the short-dated instrument during yesterday’s exercise from market participant.

Next week, the apex bank is expected to sell treasury bills to local retail and institutional investors via the primary market and rates are anticipated to be further moderated.

Also, in the week, the CBN should further offer its OMO bills to offshore investors and rates will likely remain in double digits to keep attracting interests of foreign portfolio investors, who are the main targets of the OMO auction.

Meanwhile, the money market rates depreciated by 7.86 percent on the average yesterday supported by the nearly N900 billion of OMO maturities flowing into the system at the session.

The Open Buy Back (OBB) rate declined by 7.64 percent, while the Overnight (OVN) rate depreciated by 8.07 percent.

At the close of business, the OBB rate went down to 3.93 percent from 11.57 percent on Tuesday, while the OVN rate crashed to 4.57 percent from 12.64 percent at the previous session.