Efforts by the Central Bank of Nigeria (CBN) to keep naira-denominated assets attractive saw spot rates on Nigerian OMO bills climb by over 3% across standard tenors, results from a primary market auction (PMA) revealed.
At the OMO auction held Friday, demand from local banks and foreign portfolio investors for naira assets surged dramatically, reflecting a persistent appetite for high yields. Meanwhile, average yields on OMO bills in the secondary market dropped by 109 basis points to 27.1%, as bargain hunters swooped in.
During the auction, the CBN offered a total of N500.00 billion split evenly between two maturities — N250.00 billion each for the 298-day and 319-day instruments.
The auction drew total subscriptions worth N1.39 trillion, representing a bid-to-offer ratio of 2.8x, as banks and foreign investors aggressively parked their funds in OMO bills. Capitalizing on the robust demand, the CBN raised N1.008 trillion, or 73% of the total bids submitted.
Specifically, the apex bank secured N319.54 billion from the 298-day notes and N688.30 billion from the 319-day notes. However, a closer look at the auction results revealed that 27% of bids were rejected, intensifying demand in the secondary market.
In a strategic move to attract foreign investors amidst fierce global competition for portfolio flows, the CBN raised spot rates.
For the 298-day maturity, the spot rate was set at 22.37%, up by 318 basis points compared to the previous auction. Meanwhile, the 319-day bill saw its spot rate rise by 328 basis points to 22.73%.
The hike in yields signals the apex bank’s ongoing efforts to maintain foreign interest in Nigerian markets, even as global liquidity remains tight.
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