After a spike in demand from investors in the primary auction held midweek, the apex bank lowered interest rates on open market operation (OMO) bills. As investors filled lost bids in the secondary market, the average yield on OMO bills decreased.
At the primary market auction, the Central Bank of Nigeria (CBN) made an offer of N500 billion across the normal maturities. An offer that was 2.39 times the bid indicated a high level of demand.
The authority allocated N676.65 billion, capitalizing on the strong demand. The stop rates for the instruments with durations of 97 days, 188 days, and 363 days settled at 19.50%, 21.13%, and 19.00%, respectively.
Spot rates on the short and mid curve did not move from the previous auction, although the apex bank decreased the rate on 363-day OMO bills to 21.13% from 21.50%.
The offer was split as N75.00 billion for the 95-day, N75.00 billion for the 179-day, and N350.00 billion for the 363-day bills.
The total subscription level registered at N1.20 trillion with more interest on the longer-dated bills. Longer duration OMO bills attracted N1.16 trillion from investors seeking to park cash in government instruments.
The total bet put forward for long-tenor OMO bills accounted for 96.9% of the total subscription.
The auction closed with the CBN allotting N649.65 billion – N17.00 billion of the 95-day, N7.25 billion of the 179-day, and N652.40 billion of the 361-day instruments – at respective stop rates of 19.00% (unchanged), 19.50% (unchanged), and 21.13% (previously 21.50%).
