CBN Raises N2.3 Trillion from Treasury and OMO Bills

Nigeria’s central bank has raised approximately N2.3 trillion after institutional investors piled into its open market operations (OMO) and Nigerian Treasury bills.

OMO and treasury bills are popular monetary policy tools used by the apex bank to manage liquidity prevailing in the economy. The OMO involves the buying and selling of government securities, often with the intent of controlling inflation or boosting economic growth.

This week, the aggregate investment staked by Deposit Money Banks, Foreign Portfolio Investors, Pension Fund Administrators, and wealth managers amounted to N2.566 trillion.

The Central Bank of Nigeria (CBN) began the week by offering N600 billion in OMO bills to eligible market participants, including banks and foreign investors. Subscriptions for these bills, which were split into 105-day and 245-day maturity periods, far exceeded the offer size.

The CBN received a total of N2.28 trillion in bids, a figure that is 3.8 times the amount on offer. The bank ultimately allotted N2.12 trillion for the OMO bills with a 245-day maturity, at a stop rate of 23.7%.

This move effectively neutralised excess liquidity in the financial system, causing interbank rates to rise.

Following the OMO auction, the CBN offered N220 billion worth of Nigerian Treasury bills across standard tenors.

It sought to sell N60 billion in 91-day bills, N20 billion in 182-day bills, and N140 billion in 364-day bills. Though appetite remained strong, total subscriptions of N366.55 billion were lower than the N675.66 billion recorded at the previous auction, representing a bid to offer ratio of 1.7x. The CBN successfully raised N173.83 billion from this auction.

The stop rates for the 91-day and 182-day bills remained stable at 15% and 15.50% respectively. However, the stop rate for the 364-day bills reversed its recent downward trend, rising by 62bps to 16.50%, highlighting investors’ strong appetite for longer-term securities.

In total, the CBN mopped up N2.29 trillion from the two auctions over the course of the week.