CBN’s OMO Auction Records Robust Demand, Sells N1.053 Trillion in Government Securities

The Central Bank of Nigeria (CBN) has said it successfully concluded a sale of government securities, issuing N1.053 trillion (about $680 million) in short-term instruments as part of its liquidity management exercise.

The apex bank offered N500 billion at the Open Market Operations (OMO) auction and oversubscribed, selling N1.053 trillion, with 79 per cent of the total bids, or the equivalent of $530 million, coming from foreign investors.

The auction held over the weekend was the first since the CBN’s Monetary Policy Committee (MPC) meeting, which was followed by a virtual meeting with foreign portfolio investors at the NGX investors forum.

The CBN Governor, Mr. Olayemi Cardoso, had used both meetings to set a detailed strategy to curb inflation, stabilise the exchange rate, and spur confidence in the banking system and economy.

Cardoso further highlighted in the meeting with investors an outlook for sustained increases in the CBN’s foreign currency reserves, improved liquidity in the foreign exchange market, and imminent settlement of the remaining backlog of genuine Foreign Exchange (FX) transactions by the bank.

He said, “The CBN is committed to supporting price stability by taking the necessary measures to increase liquidity in the foreign exchange markets sustainably.

“Our focus is on building a fully functioning market that allows smooth entry and exit for investors.”

Also, addressing journalists over the weekend, CBN acting Director, Corporate Communications Department, Mrs. Hakama Sidi Ali, said the development underscored the level of confidence that the apex bank now enjoyed from investors.

She said the central bank management remained  optimistic that its monetary policy measures were beginning to yield positive results.

However, the auction was in three categories based on tenors including 95-day, 179-day, and 361-day OMO bills.

The apex bank offered N75 billion in 95-day bills, with a stop rate of 19.00per cent, and received a subscription and total sales of N37.05 billion.

The 172-day bills saw N75 billion on offer at a 19.5 per cent stop rate, as investors subscribed N8.25billion, leaving CBN to settle for N6 billion.

Subscription levels for the 361-day OMO bill was robust, reflecting heightened investor appetite amidst the current economic landscape.

The 361-day bills recorded the highest rate at 21.5 per cent on a N350 billion amount offered by CBN.

The bids ranged from 19.0000 per cent to 19.0000 per cent for the 95-day bills, 119.4600 per ceny to 22.0000 per cent for the 179-day bills, and 20.6900 per cent to 23.5000 per cent for the 361-day bills.

These ranges show the variability of investor expectations regarding yield, with some investors willing to accept lower rates, while others aimed for the higher end of the spectrum.

Meanwhile, Cardoso at the NGX forum, reassured foreign investors that the central bank would settle the outstanding FX liabilities of the five remaining banks within a few days, adding that the country had so far attracted $2 billion in foreign portfolio inflows this year.

 James Emejo

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