The Central Bank of Nigeria (CBN) has offered N2.5 trillion in fresh Open Market Operations (OMO) bills as N2.433 trillion worth of existing OMO instruments matured on September 29, creating a near one-for-one rollover of liquidity in the banking system.

The latest CBN OMO auction comprises N500 billion in 147-day bills maturing February 23, 2027, alongside N1 trillion each in 182-day and 266-day instruments maturing March 30 and June 22, 2027. The longer-dated instruments account for 80% of the total offer, signalling the apex bank’s continued use of longer-tenor securities to manage liquidity.

The auction comes as banks’ placements at the CBN’s Standing Deposit Facility (SDF) climbed to about N6.278 trillion on September 29, up from N5.899 trillion four days earlier. The increase highlights the level of surplus liquidity in the banking system, while banks’ opening balances fell to N131.817 billion from N277.741 billion the previous day.

The fresh offer also comes against a backdrop of strong investor appetite for OMO securities. Across four auctions held earlier in September, investors submitted about N20.58 trillion in bids against N3.9 trillion initially offered by the CBN, while the apex bank allotted approximately N12.823 trillion. Demand remained strong even as accepted rates on longer-tenor instruments declined from 18.99% at the start of the month to 17.29% by September 24.

The September 29 auction also extends the CBN’s OMO maturity profile into 2027, with the 266-day instrument becoming the longest tenor offered in the current cycle. The outcome of the auction, particularly the eventual allotment and stop rate, will determine how much of the N2.433 trillion repayment is reabsorbed and the yield investors are willing to accept for locking funds into longer-dated CBN securities.

source: nairametrics