CBN explains OMO, T-bill operations
The Central Bank of Nigeria says it remains the issuer of the Open Market Operation bills, adding that it only issues the Nigerian Treasury Bills on behalf of the Debt Management Office and the Federal Government of Nigeria.
According to the CBN, while OMO bills are strictly for liquidity management to achieve price stability, the NTBs are meant for the financing of the Federal Government’s budgets.
It gave the clarification in a statement on Thursday, adding, “OMO bills are issued on the need basis and at irregular intervals, depending on banking system liquidity position. Conversely, for the NTBs, auctions are done mostly twice a month, strictly based on quarterly advanced or released calendar.”
The CBN stated that the tenors for the CBN OMO bills were seven days to 365 days, while those of the NTBs were 91 days, 182 days and 364 days.
It added that the obligor for the CBN OMO bills was the CBN, just as the Federal Government of Nigeria was the obligor for the NTBs.
In terms of type of auction, it said OMO allowed for single bids, where money market dealers could submit only one bid.
However, it added, multiple bids were allowed under the NTBs and money market dealers could submit several bids.
OMO bills and the NTBs each had their unique identities, separate from other securities or instruments in the money market, the CBN stated.