The Central Bank of Nigeria (CBN) on Tuesday took the financial markets by surprise by rejecting all subscriptions tendered at its latest Open Market Operations (OMO) auction, despite receiving a massive N4.9 trillion in bids from eligible market participants.
The apex bank had initially floated N600 billion worth of OMO bills across two tenors, aiming to manage system liquidity and refinance approximately N2.14 trillion in matured bills due for repayment.
However, despite the offer being significantly oversubscribed, the auction concluded with absolutely no sales or allotments made.
Market analysts attribute this “No Sale” outcome to the CBN’s strategic decision to hold off on aggressive liquidity mopping, even as the financial system remains awash with cash.
Reports indicate that the money market is currently in a net long position of approximately N4 trillion, a level of excess liquidity that typically drives high subscription rates.
The rejection of the bids left trillions of Naira in unmet demand seeking outlets in other segments. Consequently, the secondary Treasury Bills market witnessed mixed reactions.
The average yield on Nigerian Treasury Bills dipped marginally by 1 basis point to settle at 18.46 percent, signaling improved investor confidence.
Specific maturities saw varied performance: yields on 1-month, 6-month, and 12-month bills declined by 9, 9, and 4 basis points respectively, while the 3-month tenor recorded a slight increase of 2 basis points.
The CBN’s decision to walk away from the auction without selling a single bill suggests a deliberate tactical pause, potentially to avoid locking in rates that do not align with its current monetary policy objectives.