CBN rejects N1.3trn subscription at Tuesday’s OMO auction, records zero allotment

The Central Bank of Nigeria (CBN) on Tuesday took the market by surprise, rejecting a total subscription of N1.3 trillion staked against its Open Market Operation (OMO) bills at the main auction.

Despite offering N600 billion worth of bills across standard maturities to eligible market players including banks and foreign portfolio investors, the apex bank ended the session without making any allotments.

The monetary authority had offered bills with 98-day and 140-day tenors, aimed at managing system liquidity and rolling over maturing obligations. 

The auction attracted significant interest, with total subscriptions hitting the N1.3 trillion mark, signaling robust liquidity in the financial system.

However, in a move that signals the CBN’s strategic grip on rate management, the bank snubbed all bids, effectively recording a zero allotment for the session. 

Market analysts suggest this decision may be a precursor to an ad hoc midweek auction where the apex bank might seek more favourable pricing dynamics.

Following the auction outcome, trading activity in the secondary market for Nigerian OMO bills remained relatively flat as participants had earlier shifted their focus to the primary auction.

Consequently, the average yield in the secondary market held steady at 22%.

The rejection comes at a time when the financial system is awash with liquidity, with the CBN expected to continue its aggressive liquidity mopping measures to rein in inflation and stabilize the Naira.