The Central Bank of Nigeria (CBN) executed a major open market operation (OMO) on Wednesday, allotting ₦1.25 trillion worth of OMO bills to investors at a reduced stop rate of 21.99%, marking a strategic move to manage excess liquidity in the financial system.
The apex bank initially offered ₦600 billion worth of OMO bills across two tenors—₦300 billion in 272-day bills and another ₦300 billion in 363-day instruments—through a competitive bid process.
Investor appetite, however, significantly outpaced the CBN’s offering, with both local and foreign participants submitting total bids amounting to ₦2.174 trillion. Analysts attributed this surge in demand to the limited availability of fixed-income securities in the market and heightened investor preference for longer-tenor instruments.
In response to the overwhelming demand for long-term securities, the CBN bypassed the mid-tenor tranche and fully allocated ₦1.25 trillion in 363-day bills alone. This strategic decision allowed the central bank to capitalize on the market momentum while also lowering its balance sheet servicing costs.
The stop rate of 21.99% for the 363-day maturity reflects a declining yield trend from previous peak rates, which had touched as high as 24.65% in recent months. The move signals a shift in the monetary policy landscape as authorities leverage strong demand to recalibrate interest expenses.
Market watchers see the latest OMO results as an indication that liquidity absorption through debt issuance remains a key tool in the CBN’s arsenal for macroeconomic management.
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