By Boluwatife Oshadiya | March 10, 2026
Key Points
- Central Bank of Nigeria rejected about 60 percent of OMO bill subscriptions last week despite strong investor demand
- Apex bank offered ₦600 billion in fresh OMO bills Monday but allocated only ₦81 billion to investors
- High banking system liquidity persists, with money market rates hovering around 22 percent
Main Story
The Central Bank of Nigeria (CBN) has intensified liquidity management operations in the financial system after rejecting roughly 60 percent of investor bids at its Open Market Operations (OMO) bill auctions last week, even as deposit money banks and foreign portfolio investors continue to position for new issuances.
Market data shows the apex bank offered about ₦1.20 trillion across two OMO auctions but ultimately allotted only ₦490 billion from total subscriptions estimated at ₦1.22 trillion, reflecting the bank’s cautious approach to liquidity sterilisation.
The development comes as Nigeria’s money market remains highly liquid. Financial system liquidity closed the previous week at approximately ₦5.89 trillion, largely driven by inflows from maturing government securities and limited liquidity absorption by the central bank.
Analysts say the CBN is expected to sustain aggressive liquidity management in the coming days, particularly with about ₦2.4 trillion in primary market repayments anticipated to flow into the banking system.
On Monday, the central bank floated another ₦600 billion OMO auction with maturities of eight, 99, and 113 days as part of its ongoing effort to mop up excess funds circulating within the financial system.
However, despite the large offer size, the bank allocated only ₦81 billion to investors, signalling a continuation of the restrictive stance seen in previous auctions.
Stop rates for the instruments settled at 19.35 percent and 19.69 percent, while effective yields across the previous week’s OMO allotments were estimated between 20.41 percent and 20.55 percent, according to market analysts.
The liquidity conditions also influenced short-term interbank borrowing costs. Data from the Nigerian money market shows the Nigerian Interbank Offered Rate (NIBOR) declined across several maturities during the period as banks parked excess funds at the CBN’s Standing Deposit Facility (SDF).
Despite the OMO intervention, the overnight lending rate stood around 22.29 percent, reflecting continued liquidity strength within the banking system.
Meanwhile, the Open Repo rate remained unchanged at about 22.00 percent, indicating relatively stable funding costs in the interbank market.
What’s Being Said
“The central bank’s decision to reject a large portion of bids suggests it is focused on controlling liquidity without significantly raising funding costs in the system,” said Ayodele Akinwunmi, Head of Research at FSDH Merchant Bank.
“With substantial maturities expected from government securities this week, the CBN will likely continue deploying OMO auctions to absorb excess liquidity and maintain monetary stability,” said analysts at Afrinvest Securities.
What’s Next
- About ₦2.4 trillion in maturing government securities is expected to hit the financial system in the coming days, potentially increasing liquidity levels.
- Market participants anticipate additional OMO auctions by the CBN this week to prevent excessive liquidity from driving down interest rates.
- Investors are also watching the central bank’s next Monetary Policy Committee meeting, where policymakers may reassess interest rate strategy amid inflation and currency stability concerns.
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