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By Kabir Abdulsalam
The Central Bank of Nigeria (CBN) has announced historic 21% interest rate, indicating strong demand from investors.
At the Open Market Operation (OMO) bill auction, the rate saw the sale of a total of N676.65 billion on April 3, 2024. Of this amount, over N652 billion was sold at a historic 21% interest rate.
The CBN appears to have taken advantage of current high interest rates to attract investors and effectively manage excess liquidity in the financial system.
In the latest offering of 97-day bills, the Central Bank of Nigeria (CBN) offered N75 billion, which attracted a subscription of N17 billion from investors.
The total sale of N75 billion was equal to the subscription figure, indicating that the market was not particularly interested in these short-term bills.
The bills were cleared at a stop rate of 19.00%, reflecting a relatively conservative interest from investors.
CBN’s auction of 188-day and 363-day bills saw mixed results. While the 188-day bills had a lower subscription than the amount offered, the 363-day bills saw an extraordinary subscription, reflecting investors’ preference for longer-term, higher-yielding securities.
In the end, the medium-term bills had a total subscription of N20.25 billion, while the long-term bills had a subscription of N1.16 trillion. The stop rates for the two tenors were 19.50% and 21.1250% respectively.
