The Central Bank of Nigeria (CBN) has generated more than N2.07 trillion from the financial markets through sales of Treasury and Open Market Operations (OMO) bills, according to recent auction results.
The CBN’s sale of OMO and Treasury bills effectively withdrew over N2 trillion from circulation in an effort to curb excess liquidity in the financial system.
Nigeria’s persistently high inflation continues to weigh on macroeconomic stability, exacerbated by the naira’s depreciation. To offset rising inflation, investors have shown strong demand for Nigerian debt instruments due to the elevated yields on naira assets. Last week, the CBN responded by initiating large OMO sales in the primary market on Tuesday.
The high demand for OMO bills from local banks and foreign portfolio investors led the CBN to increase its offering. According to investment banks, the CBN allocated N1.447 trillion worth of OMO bills, far exceeding the N300 billion initially offered.
Following this, Nigeria’s Debt Management Office (DMO), on behalf of the CBN, also conducted a Treasury bills auction midweek to further reduce liquidity. At this primary market auction, the DMO offered N513.43 billion in Treasury bills, with stop rates on the 91-, 182-, and 364-day papers rising compared to the previous auction.
The auction results revealed strong demand, as the DMO allocated N626.33 billion—22% above the initial offer—at higher yields. The 364-day tenor represented 97% of the total allotment. Stop rates climbed across all tenors, with increases of 100 basis points (bps) for the 91- and 182-day papers and a 235 bps rise for the 364-day paper.
In a previous auction last month, ₦81.9 billion was offered with steady stop rates of 17.00%, 17.50%, and 19.864% for the 91-, 182-, and 364-day tenors, respectively, according to AIICO Capital Limited. Analysts noted that later in October, a larger auction of ₦374.669 billion saw the 364-day rate rise to 20.65%.
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