Fresh auction comes as banks park more than N6.2tn with the apex bank, putting liquidity management back in focus…..
The Central Bank of Nigeria has put N2.5 trillion of Open Market Operations instruments on offer as it moves to absorb liquidity from the banking system following the maturity of N2.433 trillion in OMO securities on Tuesday.
The auction, scheduled for September 29, 2026, closely mirrors the value of the securities maturing the same day, with the new offer exceeding the repayment by just N66.765 billion.
The CBN auction notice shows that the fresh securities are spread across three maturities.
The apex bank is offering N500 billion in 147-day instruments due on February 23, 2027; N1 trillion in 182-day instruments maturing on March 30, 2027; and another N1 trillion in 266-day instruments due on June 22, 2027.
The size of the offer means the CBN is seeking to reabsorb an amount broadly equivalent to the liquidity released as the maturing OMO instruments are repaid.
The N2.5 trillion offer represents about 102.7 per cent of the N2.433 trillion repayment.
The auction comes against a backdrop of substantial liquidity being placed by banks with the CBN.
Financial data from the apex bank showed that banks had about N6.278 trillion lodged at the Standing Deposit Facility as of September 29.
That figure was up from N6.014 trillion on September 28 and N5.899 trillion on September 25, representing an increase of roughly N379 billion, or 6.4 per cent, over the four-day period.
Banks’ opening balances, however, fell sharply to N131.817 billion on September 29 from N277.741 billion a day earlier.
The September 29 figure was nevertheless higher than the N81.653 billion recorded on September 25.
No repo, reverse repo, Standing Lending Facility usage or primary-market sales were recorded across the dates reviewed, leaving the SDF and the maturing OMO securities as the major liquidity movements ahead of the auction.
The structure of Tuesday’s auction shows a clear preference for longer maturities.
The 182-day and 266-day instruments account for N2 trillion, representing 80 per cent of the total N2.5 trillion on offer.
The shorter 147-day instrument makes up the remaining N500 billion.
The 266-day security is particularly notable because its June 22, 2027 maturity pushes the CBN’s OMO issuance further into next year.
The amount the apex bank eventually allots will determine how much of the liquidity released through the N2.433 trillion maturity is effectively reabsorbed.
The stop rates will also provide an indication of the yield investors are prepared to accept for committing funds to the longer-dated securities.
Tuesday’s auction follows an unusually strong month for demand for CBN OMO securities.
At the four auctions held on September 1, 8, 16 and 24, the CBN offered a combined N3.9 trillion but received bids of about N20.58 trillion.
The apex bank allotted approximately N12.823 trillion across those auctions, meaning investor subscriptions substantially exceeded the amounts initially offered.
September’s total subscriptions were also higher than the N18.72 trillion recorded in August.
The CBN had previously widened access to its OMO market, allowing individuals, companies and non-bank financial institutions to participate through deposit money banks.
Despite the strong demand, accepted rates on longer-dated instruments declined during September.
The rate on longer-tenor OMO securities fell from 18.99 per cent at the beginning of the month to 17.29 per cent at the September 24 auction.
The latest auction therefore comes at a time when investors continue to show strong appetite for the instruments even as accepted yields have moved lower.
The September activity forms part of a wider increase in the use of OMO operations to manage liquidity in the financial system.
The CBN absorbed N4.72 trillion through OMO sales on August 26 and 27, while cumulative OMO sales between January and April had already reached N30.12 trillion.
An earlier large-scale operation also took place on June 5, when the apex bank absorbed N3.04 trillion through an OMO auction as N2.73 trillion in securities matured on the same day.
The latest operation is therefore another instance of the CBN using its securities market to manage the amount of liquidity circulating within the banking system.
Auction follows September rate reset
The OMO auction comes just one week after the Monetary Policy Committee cut the Monetary Policy Rate by 350 basis points to 23 per cent at its September 22 meeting.
The CBN described the decision as a reset intended to bring its benchmark rate closer to prevailing money-market conditions rather than simply as a conventional monetary policy easing.
Against that backdrop, Tuesday’s auction will offer fresh insight into how investors are pricing CBN securities following the change in the policy rate.
For the banking system, the immediate focus will be on the amount ultimately allotted from the N2.5 trillion offer and the rates accepted across the three tenors.
With N2.433 trillion in maturing OMO securities returning to the system and more than N6.2 trillion already sitting at the SDF, the auction is set to provide another significant test of liquidity conditions and investor demand in the Nigerian money market.
