No plan to stop OMO bills sales to foreigners, says CBN

*The Central Bank of Nigeria clarifies that it is not thinking about excluding offshore investors from the short-term bond market

Isola Moses | ConsumerConnect

The Central Bank of Nigeria (CBN) has refuted the allegation that it is planning to freeze foreigners out of its lucrative short-term bills market.

Osita Nwanisobi, Spokesman of CBN, in an electronic communication to Bloomberg, referring to Open Market Operations bills Thursday, March 4 said: “There is no plan by the CBN to stop OMO sales to foreigners.”

Mr. Godwin Emefiele, Governor of CBN, in a media interview was quoted to have said that the Bankers’ Bank is not thinking about excluding offshore investors from the short-term bond market.

Earlier, Hassan Mahmud, Director of Monetary Policy at CBN, said Tuesday that offerings to non-residents of OMO bills would “ultimately” be phased out, without giving a time frame.

The bank had outstanding OMOs of $8.3 billion as of March 4 from $31.9 billion as of the end of 2019, according to data compiled by Bloomberg.

This was after barring domestic funds from buying the securities and reducing new issuances as the cost of offering the instruments spiked, report said.

The Central Bank used the short-term bills to lure portfolio investors and shore up the country’s currency, Naira, after the crash in crude prices led to a Dollar shortage in the country.

Now, demand for the bills remains high. In an auction Thursday, investors offered to buy 5.2 times the amount of securities sold, with yields of 10.1%.

Treasury bills with similar maturities offer about half those returns, according to report.

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