Liquidity Crunch Pushes NIBOR to 24.36% as CBN’s OMO, Bond Debits Drain ₦7trn
The Nigerian Interbank Borrowing Rate (NIBOR) surged last week, climbing by 154 basis points to close at 24.36 per cent, as aggressive liquidity mop-ups through Open Market Operations (OMO) and bond auction settlements tightened cash availability across the financial system.
More than ₦7 trillion in outflows from cumulative OMO debits of about ₦5.9 trillion and bond settlements of ₦1.54 trillion sharply reduced system liquidity, outweighing the ₦900 billion in OMO maturities that came due on Tuesday. Net system liquidity moderated to a surplus of ₦1.91 trillion, representing a 31.4 per cent week-on-week decline from ₦2.78 trillion, according to Cowry Asset Limited.
The liquidity squeeze fed directly into interbank funding costs, with upward repricing across term benchmarks. The one-month, three-month, and six-month NIBOR tenors rose by 124 basis points, 114 basis points, and 123 basis points respectively. Open Repo (OPR) and Overnight (OVN) rates spiked even more sharply, each jumping 357 basis points to settle at 26.07 per cent and 26.36 per cent, underscoring the intensity of the cash crunch.
Market participants expect liquidity conditions to remain shaped by ongoing CBN mop-up activities, even as upcoming maturities totaling ₦5.9 trillion—₦4.6 trillion in OMO bills and ₦1.3 trillion in Nigerian Treasury Bills (NTBs)—are anticipated to provide inflows. Analysts at AIICO Capital Limited noted that funding costs are likely to remain rangebound, depending on the scale of liquidity absorption.
While FAAC inflows are expected to offer some relief, Cowry Asset cautioned that these will be substantially offset by settlement for an estimated ₦1.15 trillion in fresh Treasury bills issuance. The tug-of-war between inflows and debits leaves the money market bracing for continued volatility, with borrowing costs elevated and liquidity management firmly at the center of monetary policy strategy.
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