The Central Bank of Nigeria (CBN) on Thursday mopped-up a total of N322.6 billion out of the initial N400 billion offered to investors via Open Market Operation (OMO) auction.
Investors scrambled for the longer tenure instrument as the 364 day tenor OMO bill was oversubscribed 63.25 percent. The initial offer for this tenor was N250 billion while the total subscription stood at N408.12 billion.
The CBN sold a total of N321.48 billion (364 day) at a stop rate of 13.50 percent. The investors bided at a range bid of between 13.49 and 14.50 percent for the offer which matures on September 3, 2020.
Ayodeji Ebo, managing director, Afrinvest Securities Limited explained that the long term bill offered attractive yield of about 15.6 percent, hence the high interest. The short and medium term OMO bills still look unattractive relative to the secondary market rates.
For the medium term bill, a total of N100 billion was offered for 189 day tenor but the sum of N0.48 billion was sold at a stop rate of 11.79 percent. The offer which matures on March 12, 2020 was undersubscribed at N23.04 billion with investors biding at the range of between 11.79 and 13.30 percent.
The CBN offered N50 billion for 84 day tenor but sold a total of N0.64 billion at a stop rate of 11.59 percent. Investors earlier demanded higher rate of between 11.59 and 12.75 percent. The offer which mature on November 28, 2019 recorded low subscription as the Apex bank could not offer a rate higher than the 11.59 percent.
However, the overnight inter-bank rate, the rate at which banks use to borrow and lend from one another, declined by 4.36 percentage point to 5.14 percent on Thursday from 9.50 percent the previous day.
Also, Open Buy-Back (OBB), which is the money market instrument used to raise short term capital, decreased from 8.64 percent on Wednesday to 4.21 percent on Thursday according to data from the FMDQ.
Last week Thursday, CBN was able to sale N48.05 billion out of the total amount offered (N400bn) the stop rate of between 11.59 percent and 13.00 percent for the various tenor days of the instrument.
The CBN on Wednesday announced that it plans to issues the Nigerian Treasury Bills (NTB) worth N1,002 billion for various tenor buckets in the fourth quarter of this year.
The Nigerian Treasury Bills programme released by the regulator on Wednesday, show that the same amount will be maturing during the same period. However, the CBN noted that auction amounts are subject to change without notice.
A breakdown of the NTB programme revealed that N9.62 million will be issued for 91 days tenor while the same amount will mature during the same period.
Investors are expected to position for medium term investment as the Apex bank will auction a total of N90.18 million for 182 days tenor. The same amount will also mature over the same period.
For the 364 days tenor, the CBN will auction the sum of N821.84 million to investors, while the same amount will mature in the fourth quarter.
The CBN in the third quarter (Q3) 2019 issued a total of N809.4 billion worth of Treasury Bills for various tenors.
