CBN raises N1.7tn from OMO bills as strong investor demand drives oversubscription

The Central Bank of Nigeria (CBN) has raised N1.7 trillion through its latest open market operation (OMO) bills auction, as strong demand from banks and foreign portfolio investors (FPIs) underscored continued appetite for high-yield instruments.

The apex bank conducted the auction on Monday, offering N600 billion across three tenors: 8-day, 99-day and 120-day instruments.

The offer was targeted at deposit money banks (DMBs) and FPIs, the primary participants eligible to take part in the exercise.

The auction formed part of the CBN’s liquidity management strategy, aimed at mopping up excess cash in the financial system while addressing expectations of further OMO maturities.

Investor interest proved robust, with total subscriptions rising to N1.9 trillion at the primary market auction.

Following the exercise, the CBN allotted N1.7 trillion at stop rates of 21.90 per cent, 19.89 per cent and 19.94 per cent across the respective short-term instruments.

Data from the previous trading session showed that liquidity in the financial system stood at a net surplus of N5.93 trillion, down from N8.24 trillion, largely due to outflows linked to primary market settlements.

In effect, while liquidity remains elevated, a portion of available cash has been absorbed through investor participation in government securities.

Market analysts noted that the CBN has mopped up roughly N6 trillion across its last three OMO auctions, as the money market moves towards the end of the first quarter with persistent excess liquidity.

In the preceding week, the central bank offered a total of N1.20 trillion across two OMO auctions.

Demand remained strong, in line with previous trends, as total bids climbed to N4.77 trillion — representing a 78.14 per cent increase compared with the prior auction.

Total allotments stood at N5.17 trillion, translating to bid-to-cover and bid-to-offer ratios of 0.92 times and 3.97 times respectively.

Stop rates held steady, closing at 21.90 per cent per annum for the 8-day bill and 19.79 per cent per annum for the 113-day bill, signalling sustained investor confidence in the instruments.