The average yield on Open Market Operation OMO bills dropped by 9 basis points in the secondary market, closing at 22.4%, according to financial analysts. This decline came as Nigerian banks and foreign portfolio investors (FPIs) increased their investments in these financial instruments.
Last week, the Central Bank of Nigeria (CBN) held an OMO auction on Thursday, offering N600 billion worth of OMO bills in two categories: N300 billion for 355-day maturity and another N300 billion for 362-day maturity.
Investors showed strong interest, with total subscriptions reaching N1.88 trillion, meaning demand was more than three times the available supply. The CBN eventually allocated N1.68 trillion worth of OMO bills—N725.7 billion for the 355-day bills and N951.2 billion for the 362-day bills.
Spot rates for these OMO bills also declined, aligning with the CBN’s strategy to reduce the cost of Nigeria’s debt. The stop rate for 365-day maturity OMO bills dropped from 23.95% to 19.19%, while the 362-day bill rate fell from 23.98% to 19.45%.
Last month, the CBN held just one OMO auction, signaling a deliberate move to ease liquidity tightening. Erad Partners Limited, in a market update, noted that the lower frequency of OMO auctions contributed to a 400 basis points drop in yields, as the financial system remained flush with liquidity, driving demand for fixed-income securities.
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