Investors place N6.1trn bet on OMO bills

Nigerian OMO bills auctioned by the Central Bank last week attracted N6.1 trillion from investors looking for double-digit returns on naira-denominated assets.

Following a 350-basis-point reduction in Nigeria’s benchmark interest rate, the Apex Bank conducted an open market operation, offering N1 trillion in OMO bills across three tenors.

Details from OMO bills floated for subscription showed that the Bank offered N1.0 trillion across the 68-day, 152-day and 180-day maturities.

This offer attracted N6.1 trillion in subscriptions, representing approximately 6.1x the amount offered. The CBN ultimately allotted N2.3 trillion, according to MarketForces.

No allotment was recorded for the 68-day instrument, while the 152-day and 180-day bills cleared at 17.29 per cent and 16.99 per cent, respectively.

Fixed-income market analysts said that strong demand for OMO securities, despite falling yields, highlights investors’ willingness to lock in prevailing returns before further monetary-policy transmission pushes short-term rates lower.

The OMO bill settlement reduced excess liquidity in the financial system, and money market rates eased in the absence of significant funding pressure.

This week, approximately N2.43 trillion in OMO maturities and N164 billion in bond coupons are scheduled to boost liquidity in the financial markets.

With primary-market stop rates already falling sharply and demand significantly exceeding available supply, secondary-market yields are likely to face further downward pressure, Cowry Asset Limited said in a note.

Last week, the average Treasury bill rate fell 0.37 points to 17.89%, traders said. Analysts said the outlook for money-market rates has shifted materially following the monetary policy recalibration.