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CBN resumes OMO Auction, mops up N326bn

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The Central Bank of Nigeria (CBN) on Tuesday resumed its Open Market Operations (OMO) sales, which was used to take out excess liquidity from the FAAC inflows of last week.

At the yesterday’s exercise, the apex bank mopped up a total of N325.5 billion, N125.5 billion higher than the OMO bills it auctioned to investors.

More offers were received for the long dated instrument and from the N100 billion worth of the 352-day bill, subscriptions worth N310.34 billion received and N304.75 billion allotted.

Of the N30 billion worth of the 86-day bill offered for sale, the apex bank received subscriptions worth N16.61 billion with N15.86 billion allotted, while of the N70 billion worth of the 163-day bill auctioned, offers valued at N4.89 billion were received and allotted.

The stop rates across the three tenors offered were relatively unchanged from previous levels, clearing at 11.78 percent (-2bps), 13.00 percent (+2bps) and 13.04 percent (unchanged) on the 86, 163 and 352 day bills respectively.

It was observed yesterday that the treasury bills market was generally bearish with yields rising marginally higher by 0.04 percent.

The sale of fresh treasury bills is expected today and a total of N95.68 billion would be auctioned to market players viz N10 billion of the 91-day bill, N17.6 billion of the 182-day bill and N68.08 billion of the 364-day bill.

We expect the stop rates at the auction to clear slightly above their previous levels due to the renewed OMO sale by the CBN on Monday,” Zedcrest Research stated.

Meanwhile, rates in the money market spiked by 10 percent following outflows for the N325 billion OMO sale and N75 billion funding for the CBN’s weekly wholesale FX auction, which mopped up most of the existing system liquidity which opened the day at N405 billion positive.

Consequently, the Open Buy Back (OBB) and Overnight (OVN) rates ended the session at 16.57 percent and 17.43 percent respectively.

We expect rates to moderate slightly lower on Tuesday as banks would be able to access the CBN’s SLF for their funding needs at slightly lower rates,” Zedcrest Research said.

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