CBN concludes auction of N1.05trn government securities

The Central Bank of Nigeria (CBN) said it successfully concluded a sale of government securities, issuing N1.05 trillion in short-term instruments.

The CBN said the sale, which occurred on March 1, 2024, was part of its liquidity management exercise.

In a statement on Monday, the regulator said the N500 billion offered at the open market operations (OMO) auction was oversubscribed, selling N1.053 trillion.

The auction, held on March 1, 2024, attracted substantial interest from investors, with the CBN setting stop rates as high as 21.5per cent.

The auction was broken down into three categories based on tenors: 95-day, 179-day, and 361-day OMO bills.

The apex bank offered N75 trillion in 95-day bills, with a stop rate of 19.00per cent, and received a subscription and total sales of N37.05 billion.

The 172-day bills saw N75 billion on offer at a 19.5 per cent stop rate, as investors subscribed N8.25billion, leaving CBN to settled for N6 billion.

Subscription levels for the 361-day OMO bill was robust, reflecting heightened investor appetite amidst the current economic landscape.

The 361-day bills recorded the highest rate at 21.5 per cent on a N350 billion amount offered by CBN.

Investors subscription stood at N1.09trillion and CBN eventually selling N1.01trillion for the 361.-day OMO auction conducted March 1, 2024.

Bids ranged from 19.0000% to 19.0000% for the 95-day bills, 119.4600% to 22.0000% for the 179-day bills, and 20.6900% to 23.5000% for the 361-day bills.

According the apex bank, 79 per cent of the total bids, or the equivalent of $530 million, came from foreign investors.

It is understood that the Friday auction was the first since the CBN’s monetary policy committee (MPC) meeting, which was followed by a virtual meeting with foreign portfolio investors.

The bank said Olayemi Cardoso, its governor, used both meetings to set a detailed strategy to curb inflation, stabilise the exchange rate, and spur confidence in the banking system and economy.

At the meeting with investors, Cardoso was said to have further highlighted an outlook for sustained increases in the CBN’s foreign currency reserves, improved liquidity in the foreign exchange (FX) market, and imminent settlement of the remaining backlog of genuine FX transactions by the CBN.

“The CBN is committed to supporting price stability by taking the necessary measures to increase liquidity in the foreign exchange markets sustainably,” the governor was quoted as saying.

“Our focus is on building a fully functioning market that allows smooth entry and exit for investors.”

Speaking with journalists in Abuja over the weekend, Hakama Sidi-Ali, CBN’s acting director of corporate communications department, said the development underscored the level of confidence that the bank now enjoys from investors.

She also said the management of the CBN is optimistic that its monetary policy measures are beginning to yield positive results.