The Central Bank of Nigeria (CBN) absorbed a massive liquidity wave at Thursday’s Open Market Operations (OMO) auction, underpinned by a ₦2.27 trillion maturity inflow that hit system liquidity earlier in the week.
Investor subscriptions reached a record ₦6.09 trillion against an initial offer of ₦1.00 trillion (a 6.09x bid-to-cover ratio).
Capitalizing on strong institutional demand and following its recent 350 bps Monetary Policy Rate (MPR) reduction to 23.00%, the CBN expanded total allotments to ₦2.25 trillion (a 2.25x sales-to-offer ratio) while driving clearing rates lower across key tenors.
Key Market Dynamics & Yield Curve Takeaways
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Maturity-Driven Reinvestment Loop: The ₦2.27 trillion OMO maturity provided ample liquidity for institutional investors (primarily commercial banks and pension fund administrators) to roll over positions and lock in yields ahead of further anticipated monetary easing.
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Yield Curve Inversion & Rate Compression: The stop rate on the 180-day bill cleared at 16.99%, lower than the 152-day bill at 17.29%. By rejecting all bids on the short-end 68-day paper, the CBN effectively pushed liquidity further out the curve to lower its sovereign debt servicing costs.
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Broad Secondary Market Bull Rally: The downward repricing at the primary window catalyzed secondary market trading. Average OMO yields compressed by 45 bps WoW to 19.76%, with notable yield drops recorded on the 19-Jan-27 maturity (-199 bps to 18.53%) and the 12-Jan-27 maturity (-66 bps to 19.09%).
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