The Central Bank of Nigeria (CBN) has drawn nearly N3 trillion from the financial system following its latest open market operations (OMO) sale on Tuesday, as the regulator intensifies efforts to contain rising liquidity pressures across the money market.
During the auction, the CBN offered N600 billion worth of OMO instruments spread evenly across short-dated maturities, a move that coincided with heavy inflows from maturing securities. Investors were invited to subscribe to Nigerian OMO bills with 175-day and 182-day tenors.
With the financial system recording inflows of roughly N1.4 trillion, the apex bank considered the liquidity surge significant enough to warrant another primary market issuance. According to figures from AIICO Capital Limited, excess liquidity in the market has now expanded to N5.4 trillion, driven by a wave of maturing short-term notes.
In the secondary market, OMO yields climbed as portfolio managers reduced their exposures. Conversely, the treasury bills market traded quietly, prompting a general decline in average yields.
Across board, yields compressed by 1 basis point each in the short, mid, and long ends of the curve. The dip was supported by rising demand for the 79-day, 170-day, and 352-day bills.
By contrast, average yields in the OMO segment widened by 6bps, settling at 21.8%, as investors priced in the effect of the fresh supply.
