In a strategic move to manage excess liquidity within the financial system, the Central Bank of Nigeria (CBN) conducted a massive Open Market Operation (OMO) auction on Monday, selling ₦1.3 trillion in bills.
Despite an initial offer of ₦600 billion across two short-term tenors, the auction saw an overwhelming total subscription of ₦2.0 trillion from investors.
The monetary authority ultimately allotted ₦1.3 trillion at stop rates of 22.39% and 19.48% for the February and May maturities, respectively, as it sought to neutralize more than ₦4 trillion in excess system liquidity.
The impact of the auction on money market financing costs was immediate yet varied. While the overnight rate showed a marginal increase to 22.79%, the interbank offered rates signaled tighter system liquidity overall.
Meanwhile, the Nigerian Treasury Bills secondary market remained predominantly bullish, with average yields declining to 17.53%.
This supportive climate in the secondary market suggests that investors are balancing their portfolios between the CBN’s high-yield OMO offerings and more stable treasury instruments as the central bank maintains its hawkish stance on inflation management.