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CBN offers N50bn after 5 weeks of non-issuance of OMO bills

After five weeks of non-issuance of Open Market Operation (OMO) bills, the Central Bank of Nigeria (CBN) on Thursday offered N50 billion instrument to investors. A breakdown of the auction show that N10 billion was offered for 103-day for, N10 billion for 173-day, and N30 billion for 362-day tenors.

However, the CBN sold bills worth N45.36 billion, which was 91 percent of the total offered amount across the 103-day (N5.56 billion), 173-day (N9.80 billion), and 362-day (N30.00 billion) tenors. The stop rates cleared lower at 4.92 percent (-3 bps) for the 103-day, 7.74 percent (-5 bps) for 173-day, and 8.94 percent (-5 bps) for 362-day tenors.

Analysts at FSDH research said demand was skewed towards long tenor maturity bills with bid-to-cover ratio settling at 2.64x, while the 103-day and 173-day tenor bills witnessed an under-subscription with bid-to-cover ratios settling at 0.56x and 0.98x, respectively.

The overall auction was oversubscribed, indicating a subscription level of 189 percent (N94.44 billion).
OMO bill, an instrument used by the regulator to control supply of money is no more sufficient as a tool to attract FX inflow from FPIs given the country’s current FX situation.

A report by FSDH research showed that the OMO bills market closed on a positive note on Friday with average yield across the curve declining by 6 bps to close at 4.01 percent.

The money market rates surged by an average of 1531 bps as the system liquidity was negatively impacted due to the FX retail auction and an OMO auction by the CBN. The Nigerian treasury market closed on a positive note with average yield across the curve declining by 1 basis point to close at 1.58 percent on Friday.

The Overnight (O/N) rate increased by 16.01 percent to close at 19.80 percent. The Open Buy Back (OBB) rate also increased by 14.60 percent to close at 17.60 percent. At the foreign exchange market, Naira depreciated marginally by 0.04 percent as the dollar was quoted at N386.00 compared to N385.83 as on the previous day.

Nigeria’s currency on Saturday maintained stability at N474 and N475 per dollar on the black market and retail Bureau segment of the foreign exchange market.

The FGN bond market closed on a positive note Friday, as the average bond yield across the curve cleared lower by 1 basis point to close at 4.66 percent from 4.67 percent on the previous day.

Average yields across medium and long tenor of the curve declined by 5 bps and 1 basis point, respectively, while the average yield across short tenor of the curve remained unchanged.

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