CBN Sells ₦1.3trn in OMO Bills to Drain Excess Liquidity

The Central Bank of Nigeria (CBN) moved aggressively into the money market on Monday, selling ₦1.3 trillion worth of Open Market Operation (OMO) bills to mop up excess liquidity estimated at over ₦4 trillion.

The apex bank had initially offered ₦600 billion across two short-term maturities, February 24 and May 26, with ₦300 billion apiece. Investor demand was strong, with total subscriptions reaching ₦2 trillion, but the CBN allotted ₦1.3 trillion at stop rates of 22.39 per cent and 19.48 per cent, respectively.

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The auction tightened liquidity conditions, reflected in mixed movements across interbank rates. The Nigerian Interbank Offered Rate closed at 22.78 per cent, down four basis points, while the Overnight rate edged up one basis point to 22.79 per cent. The Open Repo rate held steady at 22.50 per cent.

In the Treasury Bills secondary market, yields showed varied performance. The one-month tenor declined by six basis points, while the three-month, six-month, and twelve-month papers rose by 16, 23, and two basis points, respectively. Overall, the average Treasury Bills yield closed bullish, easing two basis points to 17.53 per cent, underscoring positive investor sentiment despite the liquidity tightening measures.

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The robust subscription and sizeable allotment highlight continued investor appetite for high-yield short-term instruments, even as the CBN intensifies efforts to rein in excess liquidity and stabilise financing costs in the money market.