The Central Bank of Nigeria’s (CBN) decision to widen access to Open Market Operation (OMO) securities has triggered a sharp surge in investor activity, with OMO Bills accounting for N6.01 trillion of transactions in the week ended August 14. The strong demand came despite the CBN offering N600 billion, highlighting growing investor appetite for short-term government securities and the immediate impact of the regulator’s policy adjustment.
Data from the Fixed Income Dashboard showed that 2,022 transactions worth N8.09 trillion were recorded across Nigeria’s fixed income market during the week. OMO Bills dominated activity, accounting for 920 trades valued at N6.01 trillion — about 74 per cent of the total face value traded and 46 per cent of all transactions. Treasury Bills followed with N1.50 trillion from 773 trades, while FGN Bonds recorded 326 transactions worth N571.65 billion.
The surge followed the CBN’s move to broaden participation in OMO securities, allowing non-bank financial institutions, corporates and retail investors to gain access through Deposit Money Banks. Analysts said the move could deepen Nigeria’s money market, improve liquidity and strengthen the transmission of monetary policy. Cowry Asset Management described the reforms as a liberalising and liquidity-friendly adjustment, while FBNQuest said wider participation could increase activity across the money and fixed-income markets.
However, analysts cautioned that increased demand could eventually push OMO yields lower as more investors enter the market. Cowry Asset Management noted that the broader investor base could place downward pressure on clearing yields, while FBNQuest warned that lower yields could reduce treasury income opportunities for banks and moderate the attractiveness of naira assets. Despite the changes, the CBN retained control over the volume, tenor and frequency of OMO issuances, giving it significant influence over market yields.
The latest figures underline the growing importance of short-term government securities in Nigeria’s financial market, with OMO Bills and Treasury Bills jointly accounting for 1,693 transactions valued at more than N7.51 trillion. OMO Bills closed at yields of 21.50 per cent for the shorter tenor and 20.79 per cent for the one-year tenor, showing that investors remain strongly interested in relatively short-term naira instruments. With broader participation now permitted, market watchers will be watching closely to see whether strong demand continues and how the policy affects liquidity, yields and investment opportunities in the months ahead.
source: Leadership
