In a strong display of market confidence, local deposit money banks (DMBs), foreign portfolio investors (FPIs), and other authorised dealers bid heavily on the Central Bank of Nigeria’s (CBN) Open Market Operation (OMO) bills auction held on Tuesday, placing a staggering N1.45 trillion in offers.
The auction attracted an overwhelming demand, reflecting the appeal of Nigeria’s elevated yields in its fixed-income market.
The CBN had initially offered N300 billion across long-dated maturities in response to increased liquidity levels within the banking system. However, the auction saw significant oversubscription with investors seeking higher returns amidst Nigeria’s high inflation environment and fluctuating market conditions. According to CardinalStone Limited, investor demand was concentrated on the long-end maturities, with a bid-to-offer ratio reaching 4.83 times.
The CBN ultimately sold N1.447 trillion at a stop rate of 24.28%, a competitive rate that drew particular interest from alpha-seeking investors and wealth managers keen on securing long-dated debt instruments. AIICO Capital Limited highlighted that all allotments were allocated to the long-end tenor, with no bids placed for short and medium-term instruments.
Following this robust OMO turnout, market expectations remain high as the CBN is set to conduct another Treasury bills auction on Wednesday, offering N513.43 billion across standard maturities. Market analysts anticipate a similar strong reception, noting that the elevated interest rates continue to drive high demand in Nigeria’s fixed-income landscape.
