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Investors submitted ₦5.57trn in bids against combined offers of ₦2.3trn at the November 3 and 4 auctions.
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OMO allotments accounted for ₦2.95trn, while Treasury bills sales stood at ₦509.41bn.
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Banking system liquidity exceeded ₦7.72trn ahead of the latest auctions, amid projected November inflows of ₦13.79trn.
November 06, (THEWILL) – The Central Bank of Nigeria (CBN) absorbed ₦3.46 trillion from the financial system through its latest Open Market Operations (OMO) and Treasury bills auctions, as strong investor demand allowed the apex bank to increase its allotments despite leaving substantial bids unaccepted.
The auctions, conducted on November 3 and 4, attracted combined subscriptions of ₦5.57 trillion against offers of ₦2.3 trillion, representing demand of more than twice the amount advertised.
The CBN allotted ₦2.95 trillion through OMO bills and ₦509.41 billion through Treasury bills, bringing total allotments to approximately ₦3.46 trillion.
OMO transactions accounted for about 85 percent of the combined allotment, highlighting the central bank’s greater reliance on the instrument to absorb excess liquidity from the banking system.
At the November 3 OMO auction, the CBN offered ₦1.5 trillion across 119-day, 126-day and 133-day instruments but received subscriptions of ₦3.52 trillion, about 2.35 times the offer.
The apex bank allotted ₦2.95 trillion, with demand concentrated in the 133-day instrument, which attracted ₦2.36 trillion, representing approximately 67 percent of total subscriptions.
Stop rates stood at 17.77 percent for the 119-day bill, 17.71 percent for the 126-day instrument and 17.67 percent for the 133-day bill.
The latest allotment represented a sharp increase from the October 29 auction, when the CBN sold ₦244.93 billion despite receiving ₦2.28 trillion in bids.
T-Bill Demand Rises As CBN Holds Rates
The November 4 Treasury bills auction also recorded strong demand, with subscriptions reaching ₦2.045 trillion against an offer of ₦800 billion.
However, the CBN allotted only ₦509.41 billion, leaving approximately ₦1.54 trillion in bids unaccepted.
The 364-day instrument dominated demand, attracting ₦1.994 trillion in subscriptions and receiving ₦461.84 billion in allotments.
The 91-day bill attracted ₦25.01 billion in bids, of which ₦22.40 billion was allotted, while the 182-day instrument received ₦25.83 billion in subscriptions and ₦25.17 billion in allotments.
The latest allotment was significantly higher than the ₦71.16 billion recorded at the October 28 auction, when the central bank rejected most investor bids.
Despite the increase in subscriptions, the CBN maintained Treasury bills stop rates at their previous levels.
The 91-day instrument cleared at 15.40 percent, while the 182-day and 364-day bills settled at 15.79 percent and 15.80 percent, respectively.
Investors, however, demanded higher yields on longer-dated securities, with bids for the 364-day bill reaching 18.18 percent, substantially above the accepted rate.
In the secondary market, average yields increased by 43 basis points to 17.70 percent on November 3 from 17.28 percent on October 28.
The three-month benchmark yield climbed by 130 basis points to 17.40 percent, while the six-month benchmark increased by 122 basis points to 17.85 percent.
The difference between primary and secondary market yields, alongside the higher OMO rates, reflects varying investor return expectations across short-term government securities.
For instance, the 126-day OMO stop rate of 17.71 percent was 192 basis points above the 182-day Treasury bills rate of 15.79 percent.
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Excess Liquidity Drives Continued OMO Absorption
The latest OMO allotment comes amid substantial liquidity in the banking system and expectations of sizeable inflows in November.
Financial data showed that banks had more than ₦7.72 trillion in the Standing Deposit Facility on November 3, indicating elevated excess liquidity.
The liquidity position followed approximately ₦2.016 trillion in OMO maturities, partly offset by the CBN’s subsequent ₦2.95 trillion allotment.
In September, the apex bank sold ₦17.51 trillion in OMO securities against ₦10.89 trillion in maturities, resulting in a net liquidity withdrawal of ₦6.62 trillion.
The CBN also allotted ₦4.69 trillion at its September 29 OMO auction against an advertised offer of ₦2.5 trillion.
At the October 22 auction, OMO allotments reached ₦2.63 trillion against an offer of ₦2 trillion, before falling sharply at the final auction of the month.
The Financial Markets Dealers Association reported that banking system liquidity increased by 56.75 percent to ₦7.373 trillion in October as OMO absorption moderated.
The association also projected ₦13.79 trillion in liquidity inflows during November, largely from OMO maturities, government allocations and Treasury bills repayments.
Meanwhile, the Debt Management Office has raised approximately ₦1.82 trillion against ₦2.95 trillion offered across four Treasury bills auctions in the fourth quarter.
The latest transactions highlight the CBN’s continued use of OMO and Treasury bills to manage excess liquidity, while investors remain willing to commit substantial funds to short-term government securities at prevailing yields.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
