Monday’s main market auction by the monetary authority saw a sharp decline in the interest rate given on one-year open market operations (OMO bills). The top bank has started to offer higher rates with intermittent or periodic rate repricing throughout tenors, especially for one-year bills.
Large bids at the auction caused the spot rate on one-year bills to drop by 10 basis points, from 22.43% to 22.33%, according to the auction data. Traders reported that the Central Bank of Nigeria (CBN) bid N500 billion in the OMO auction, spanning all maturities.
The auction had a high level of demand, with a bid-to-offer ratio of 2.08 times. At the auction, stop rates for the 105-day bills were resolved at 18.74%. 189-day notes were auctioned by the CBN at a spot rate of 19.59%. Furthermore, a 357-day OMO bill was sold for 22.33%, which is 10 basis points less than the previous rate.
At various auctions conducted by the apex bank, subscription levels have been strong. The CBN has been offering higher rates than debt management office. Because of the excess subscription level, rates were re-priced at the auction, according to analysts.
