The Central Bank of Nigeria (CBN) allotted N3.854 trillion at its Open Market Operations (OMO) auction on Tuesday, more than double the N1.5 trillion initially offered as investors showed strong demand for longer-dated securities.
The apex bank received N4.069 trillion in subscriptions, representing a bid-to-cover ratio of 2.71 times the advertised offer, and accepted about 94.71 per cent of the bids.
The CBN had offered N500 billion each across the 154-day, 252-day and 329-day instruments. However, demand for the longer tenors prompted the bank to increase its allotment by N2.354 trillion above the original offer.
The 329-day instrument attracted the strongest demand, receiving N2.82 trillion in bids against the N500 billion offer. The CBN allotted N2.79 trillion at a stop rate of 15.99 per cent.
The 252-day bill attracted N791.50 billion in subscriptions, with N783.50 billion allotted at 16.68 per cent, while the 154-day instrument received N457.89 billion in bids and had N280.76 billion allotted at 17.44 per cent.
The auction indicates a clear preference among investors for longer-term securities despite their lower stop rates. The difference between the 154-day and 329-day instruments was 145 basis points.
The latest operation also represents an increase of about N900 billion from the N2.95 trillion allotted at the CBN’s November 3 OMO auction.
The large allotment comes amid elevated liquidity in the banking system, with balances held by banks at the CBN’s Standing Deposit Facility rising to N8.311 trillion in the week ended November 6.
The latest OMO operation is expected to further support the CBN’s liquidity-management efforts, although its overall impact will depend on other factors, including maturing OMO instruments, Treasury Bills repayments and Federation Account allocations.
