In a significant move to curb excess liquidity in the Nigerian financial system, the Central Bank of Nigeria (CBN) has successfully allotted N745.4 billion in Open Market Operation (OMO) bills to investors. The apex bank initially offered N600 billion across two tenors via a competitive auction, aiming to absorb the surplus cash flow in the money market.
This strategic issuance follows a period of robust liquidity, primarily driven by the absence of treasury bill auctions and the maturity of previously issued bills. As a result, the financial market was awash with funds, prompting the CBN’s intervention.
Reports from CardinalStone Securities revealed that investor appetite remained healthy, with a bid-to-offer ratio of 1.3x. The central bank ultimately sold only the longest-tenor instruments, offering a compelling stop rate of 23.99%—an attractive yield for institutional investors.
Market analysts have noted that this sizable allotment is likely to tighten liquidity in the banking sector ahead of fresh inflows from maturing OMO instruments. Over the past week, investor interest has intensified in the long-end of the curve, with yields dipping by 50 basis points to 25.90%.
Meanwhile, short- and mid-tenor OMO instruments recorded slight declines in yields—2 basis points and 12 basis points respectively—bringing them to 26.14% and 27.19% per annum. The average OMO yield, according to Coronation Merchant Bank, now stands at 26.41%, down from 26.70% the week before.
Liquidity levels in the Nigerian financial system ended the week on a high, closing at N1.58 trillion—up substantially from N401.22 billion—mainly due to the inflow from the Federation Accounts Allocation Committee (FAAC).
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