CBN Offloads ₦1.3 Trillion OMO Bills To Drain Excess Liquidity From Financial System

The Central Bank of Nigeria (CBN) returned to the money market on Monday with a sizeable Open Market Operations (OMO) auction, selling ₦1.3 trillion worth of bills in a move aimed at tightening liquidity conditions within the banking system.

The apex bank initially offered ₦600 billion across two short-term maturities — February 24 and May 26 — allocating ₦300 billion to each tenor. However, investor appetite proved significantly stronger than anticipated, with total subscriptions reaching ₦2.0 trillion.

Following the auction process, the CBN ultimately allotted ₦1.3 trillion at stop rates of 22.39 percent for the February 24 maturity and 19.48 percent for the May 26 instrument.

Liquidity Conditions and Interbank Rates

The auction was conducted at a time when excess liquidity in the financial system was estimated at over ₦4 trillion. Despite the liquidity mop-up, Nigerian Interbank Offered Rates closed mixed. The overnight rate declined by 4 basis points to 22.78 percent, suggesting moderating liquidity pressures.

Money market rates also displayed varied movements. The Overnight Policy Rate edged up by 1 basis point to 22.79 percent, while the Open Repo rate remained unchanged at 22.50 percent.

Treasury Bills Market Dynamics

Activity in the Treasury Bills secondary market showed mixed yield movements. The 3-month, 6-month, and 12-month tenors recorded yield increases of 16 basis points, 23 basis points, and 2 basis points, respectively.

In contrast, the 1-month maturity yield declined by 6 basis points. Overall, the average Nigerian Treasury Bills yield eased by 2 basis points to close at 17.53 percent, reflecting improved investor confidence in the fixed-income market.

Market analysts interpret the CBN’s action as a continuation of its liquidity management strategy aimed at curbing inflationary pressures while stabilising money market rates.