By Dipo Olowookere

Foreign Portfolio Investors (FPIs) and others who were eligible to buy treasury bills offered for sale at the Open Market Operations (OMO) in Nigeria purchased them at a higher rate than what their local counterparts bought at the primary market auction of the previous day.

On Wednesday, the Central Bank of Nigeria (CBN) conducted a PMA, which was mainly for domestic investors and the T-bills were sold to them for as low as 1.80 percent and as high as 3.75 percent.

The midweek exercise recorded a subscription level of 610 percent as the apex bank received N89.0 billion for the N14.6 billion worth of treasury bills it offered to sell.

Stop rate for the 91-day bill was dropped by the CBN to 1.80 percent from 2.00 percent, rate for the 182-day bill was cut to 2.04 percent from 2.20 percent, while rate for the 364-day was pruned to 3.75 percent from 4.02 percent.

But yesterday, when the banking watchdog floated an OMO sale and rates were still at their previous levels, with appetite for the investment tool remaining high.

Details of the OMO auction analysed by Business Post showed that the central bank approached the market with N80.0 billion of the liquidity management tool and it received bids valued at N167.6 billion, indicating a subscription level of 210 percent.

A breakdown of the exercise showed that N10 billion worth of 89-day bill was offered for sale, another N10 billion of 180-day bill was auctioned and N60 billion worth of 348-day bill was offered for sale.

But when the bids were analysed, investors staked N20.04 billion on the three-month instrument, N24.00 billion on the six-month bill and N123.54 billion on the one-year tenor.

However, the central bank allotted what it initially offered for sale, with the stop rate of the 89-day bill clearing at 4.95 percent, the 180-day bill at 7.79 percent and the 348-day bill at 8.99 percent.

Meanwhile, the average money market rates depreciated by 5.30 percent on Thursday to 3.25 percent from 8.55 percent. This followed the 5.37 percent decline in the Open Buy Back (OBB) rate and the 5.22 percent fall in the Overnight (OVN) rate.

At the close of transactions yesterday, the OBB rate went down to 2.80 percent from 8.17 percent, while the OVN rate dipped to 3.70 percent from 8.92 percent.

It was observed that the decline in rates came on the back of improved liquidity in the financial space as a result of inflows from maturing OMO bills on Thursday.

https://businesspost.ng/economy/cbn-sells-omo-bills-to-foreign-investors-at-8-99/