• Sunday, April 21, 2024
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CBN sells 1yr OMO bills at record 21.5% to lure foreign inflows

No more foreign currency collateral for naira loans — CBN

…Yield up to 27.3%

Nigeria sold a record N1.056 trillion in OMO bills on Friday with the yield on the one-year bill rising to 27.3 percent as the CBN ups the ante in its attempt to lure foreign portfolio inflows.

Olayemi Cardoso, the Central Bank of Nigeria (CBN) governor, had promised investors during a call on Thursday that rates will trend higher at the OMO auction.

The stop rate on the one-year bill was 21.5 percent compared to 17 percent at the last auction. The stop rate on the one-year bill works out to a yield of 27.3 percent. The stop rates on the 95-day and 179-day bills hit 19 and 19.5 percent respectively.

The auction saw strong investor demand for the one year OMO bills as it was oversubscribed to the tune of N1.01 trillion, three times more than the N355 billion that was offered.

Cardoso had revealed yesterday that the stop rates will edge closer to the MPR which was jacked up by a record 400 basis points to 22.75 percent at the Monetary Policy Committee (MPC) meeting on Tuesday.

He said that the CBN had plans to increase OMO frequency and volumes to mop up liquidity and provide investment opportunities for FPIs at the meeting yesterday.

Headline inflation in Nigeria surged 29.9 percent in January, according to data by the NBS. The relentless spike in the prices of goods and services has worsened a cost of living crisis in Africa’s most populous nation and has left investors with negative real return on investment.

The CBN estimates that inflation will moderate in the medium term to 21.4 percent.

The shorter OMO bills tenor saw low buys of N37.05 billion and N6.00 billion for the 95-day bills and 179-day bills respectively compared to the N75 billion offered.

Prior to this auction, the CBN has had three OMO bills auctions and had mopped up N1 trillion liquidity.

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