The Central Bank of Nigeria (CBN) has lowered interest rates on Open Market Operations (OMO) securities while seeking to partially roll over maturing debt, presenting ₦600 billion worth of instruments to market participants.
On Tuesday, the financial system received a substantial liquidity injection of ₦984.22 billion from maturing OMO securities. To manage this influx, the CBN conducted auction activities early in the week, focusing on medium-term instruments.
Without the OMO auction intervention, money markets would have faced excessive liquidity, prompting the central bank to maintain tight funding conditions and curb surplus cash in circulation. The CBN split its ₦600 billion offering between 106-day and 169-day maturity OMO instruments, targeting qualified institutional investors.
Strong investor demand at the auction enabled the CBN to lower rates on the shorter 106-day securities while increasing rates on the longer 169-day papers, according to published auction results. The central bank has been systematically reducing offered rates to minimize balance sheet costs.
Investment demand reached ₦1.14 trillion across both medium-term maturities, with the CBN ultimately allocating ₦1.13 trillion. The 106-day OMO security rate declined by 18 basis points to 23.59%.
Conversely, the 169-day maturity rate increased by 52 basis points to 24.50%. Following the auction, traders at Erad Partners Limited reported the 11 Nov OMO bill trading at 24.35/24.20 in secondary markets.
During the previous week’s Open Market Operations, positive market sentiment persisted across the yield curve, with average rates falling by 38 basis points to close at 26.51% week-over-week. The short-term, medium-term, and long-term segments experienced rate declines of 20 basis points (closing at 27.59%), 44 basis points (closing at 26.35%), and 39 basis points (closing at 26.37%), respectively.
