By Boluwatife Oshadiya | March 2, 2026
Key Points
- Average OMO bills yield rises to 21.1% in the secondary market
- CBN allots ₦1.1 trillion after ₦1.9 trillion subscription
- Rate cut to 26.5% triggers cautious portfolio repositioning
Main Story
The average yield on Nigerian Open Market Operation (OMO) bills climbed to 21.1 percent in the secondary market as investors adjusted positions following the Central Bank of Nigeria’s recent monetary policy shift.
The uptick in yields reflects selloffs despite surplus liquidity in the financial system, as market participants reacted to the CBN’s 50 basis point reduction of the Monetary Policy Rate (MPR) to 26.5 percent — the first rate cut after a prolonged tightening cycle.
Last week, the CBN issued ₦600 billion in OMO bills across 6-day, 104-day, and 167-day tenors. Total subscriptions reached ₦1.9 trillion, underscoring strong demand, particularly for the 167-day instrument. The apex bank ultimately allotted ₦1.1 trillion.
Stop rates were set at 21.94 percent for the 6-day bills, 18.45 percent for the 104-day bills, and 18.77 percent for the 167-day bills, indicating sustained appetite along the mid-curve.
Although investors trimmed holdings amid tightening spot rates and evolving primary market pricing, OMO yields remain elevated relative to inflation, preserving their attractiveness to foreign portfolio investors and domestic banks seeking short-term yield opportunities. Nigeria’s inflation rate moderated to 15.10 percent in January 2026, reinforcing positive real returns on fixed-income instruments.
The Issues
The adjustment in OMO yields comes at a pivotal moment in Nigeria’s monetary cycle. After aggressively tightening policy through 2024 and 2025 to combat inflationary pressures and stabilise the naira, the CBN has now signalled the beginning of cautious policy easing.
The critical challenge lies in balancing growth support with exchange rate stability. Elevated OMO yields have historically been instrumental in attracting foreign portfolio inflows — commonly referred to as “hot money” — which help stabilise foreign exchange reserves. A sustained decline in yields could test the durability of these inflows.
At the same time, moderating inflation gives the CBN limited space to recalibrate policy without undermining price stability.
What’s Being Said
In its latest policy communication, the Central Bank of Nigeria stated that the rate cut was designed to sustain disinflation momentum while preserving financial system stability.
Cowry Asset Management noted in a research report that “reduced inflationary pressure provides the CBN with room to thoughtfully relax monetary conditions without destabilising markets.”
What’s Next
- Investors will monitor the next OMO issuance for indications of yield direction.
- The Monetary Policy Committee’s next meeting will clarify whether easing continues.
- Secondary market yields will be closely watched for signs of sustained compression.
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