OMO Maturities Inject N3.39tn Liquidity into Nigeria’s Banking System, Drive Market Shift
The Nigerian financial system is set for a major liquidity boost this week, with an estimated N3.39 trillion expected to flow into the banking sector. According to the latest report from the Financial Markets Dealers Association (FMDA), Open Market Operation (OMO) maturities will account for the bulk of this inflow, signaling a significant shift in short-term market liquidity conditions.
Data from the report shows that OMO bills worth N2.93 trillion will make up about 86% of the total expected inflows. Treasury bill maturities are projected at N331.88 billion, while FGN bond coupon payments will add another N126.36 billion. This surge comes after a relatively tight liquidity week that saw significant withdrawals by the Central Bank of Nigeria.
In the previous week, system liquidity had dropped by 13.69% as the Central Bank of Nigeria (CBN) mopped up about N1.49 trillion through Treasury bill auctions. This tightening, combined with lower maturing securities, reduced available cash in the financial system before the expected rebound this week.
Meanwhile, the fixed income market continued to reflect shifting investor sentiment, with yields trending upward across key instruments. Average Treasury bill yields climbed by 72 basis points to 18.31%, while FGN bond yields edged higher to 16.95%. The 10-year government bond also rose by 17 basis points to 17.61%, highlighting ongoing pressure from inflation expectations and liquidity conditions.
Despite rising yields, market activity showed strong resilience. Treasury bill turnover surged by 137.49% to N1.51 trillion, while FGN bond trading volume jumped by 75.91% to N1.20 trillion. Analysts attributed the increased participation to investors seeking higher returns amid weak demand and evolving domestic macroeconomic conditions, even as global bond yields generally declined.
source: This day