The Central Bank of Nigeria (CBN) injected an estimated N447 billion into the banking system after repaying N2.99 trillion in maturing Open Market Operations (OMO) bills, despite issuing N2.54 trillion in fresh OMO securities at its latest auction.
Financial data released by the apex bank on Tuesday showed that N2.97 trillion in OMO bills matured on July 14, while an additional N17.05 billion was paid in primary market repayments, bringing total repayments over Monday and Tuesday to N2.987 trillion.
After sterilising N2.54 trillion through fresh OMO issuances on July 13, the CBN effectively injected a net N447 billion into the financial system.
At the July 13 OMO auction, the CBN offered N600 billion across three maturities, 8-day, 99-day and 127-day bills, with N200 billion allocated to each tenor.
Investor appetite far exceeded expectations, with total subscriptions reaching N2.55 trillion, more than four times the amount offered.
The breakdown shows:
- The 8-day bill attracted N229.58 billion in subscriptions, with N228.90 billion allotted at a stop rate of 21.89 per cent.
- The 99-day bill received N462.18 billion in bids, all of which were allotted at 20.49 per cent
- The 127-day bill dominated demand, attracting N1.854 trillion in subscriptions. The CBN allotted the full amount at a stop rate of 20.17 per cent, accounting for about 73 per cent of total investor demand.
Unlike the June auction, where only part of the bids for the longer-dated paper was allotted, the CBN made full allotments across all three maturities in July.
The latest auction highlights growing investor preference for longer-term OMO instruments.
Demand surged from N1.77 trillion at the June 30 auction to N2.55 trillion in July, even though the CBN reduced the offer size from N900 billion to N600 billion. The sharp increase suggests liquidity conditions in the banking sector remain robust.
The longer-dated paper continued to attract the bulk of investor interest. While the 161-day bill accounted for 67% of subscriptions in June, the 127-day bill captured 73% of total demand in July.
The relatively weaker interest in the shorter 8-day instrument reinforces investors’ preference for locking in yields over longer tenors.
The auction also reflected the gradual decline in OMO yields. Stop rates fell as maturities lengthened, from 21.89 per cent on the 8-day bill to 20.17 per cent on the 127-day paper.
OMO bills remain one of the CBN’s primary tools for managing liquidity and influencing short-term interest rates. The latest auction follows the apex bank’s aggressive liquidity mop-up campaign in June, when it absorbed about N4.74 trillion from the banking system.
Despite the moderating yields, the strong oversubscription underscores sustained demand from banks and institutional investors, who continue to view OMO bills as attractive, low-risk investment instruments in Nigeria’s high-liquidity environment.
