CBN targets N1.5trn OMO sale as liquidity tops N5.9trn
The Central Bank of Nigeria (CBN) is offering N1.5 trillion in fresh Open Market Operations (OMO) bills today, intensifying its liquidity mop-up operations as banking-system cash balances remain above N5.9 trillion amid another N2.448 trillion in projected inflows this week.
The auction, the third since November 3, comes as the apex bank steps up efforts to contain excess liquidity and prevent the accumulation of idle funds in the financial system.
The N1.5 trillion offer is spread equally across three maturities of 154 days, 252 days and 329 days, with N500 billion allocated to each tenor.
The fresh offer follows two substantial OMO auctions conducted on November 3 and November 6, through which the CBN allotted a combined N5.667 trillion, highlighting the scale of its ongoing liquidity management operations.
According to the Financial Markets Dealers Association (FMDA) weekly market report published on Monday, November 9, banking-system liquidity rose by 15.36 per cent week-on-week to N8.505 trillion at the close of trading on Friday, November 6, from N7.373 trillion in the preceding week.
The elevated liquidity position comes despite the CBN’s aggressive securities sales, with substantial maturities expected to return funds to the banking system.
The FMDA projects N2.448 trillion in liquidity inflows this week, although the amount represents a 6.21 per cent decline from the N2.610 trillion recorded in the preceding week.
OMO maturities account for the bulk of the expected inflows, estimated at N2.298 trillion, representing 93.9 per cent of the total and a 13.99 per cent increase from N2.016 trillion in the previous week.
Treasury Bills maturities are projected at N148.565 billion, while corporate bond coupon payments are expected to contribute N1.707 billion.
No inflows are anticipated from Federal Government of Nigeria (FGN) bond coupons, FGN bond maturities, commercial paper maturities or Federation Account Allocation Committee distributions during the week.
Meanwhile, CBN financial data showed that banks had N5.915 trillion deposited at the apex bank’s Standing Deposit Facility (SDF) on November 9, down from N8.311 trillion on November 6 following OMO settlements.
The decline in SDF balances reflects the impact of the CBN’s liquidity absorption operations, although the broader banking-system liquidity figure remained elevated on a week-on-week basis.
The scale of the latest auction is also underscored by the CBN’s recent issuance activities.
At its November 3 auction, the apex bank offered N1.5 trillion, attracted subscriptions of N3.52 trillion and allotted N2.95 trillion.
Stop rates stood at 17.77 per cent, 17.71 per cent and 17.67 per cent for the 119-day, 126-day and 133-day instruments, respectively.
At the November 6 auction, subscriptions rose to N5.74 trillion against another N1.5 trillion offer, while the CBN allotted N2.72 trillion.
The stop rates declined to 17.25 per cent for the 179-day instrument, 16.54 per cent for the 270-day bill and 15.74 per cent for the 361-day tenor.
Combined allotments from the two auctions reached N5.667 trillion, equivalent to about 91.7 per cent of the N6.182 trillion allotted throughout October.
In the Treasury Bills market, the Debt Management Office (DMO) allotted N509.401 billion at its November 4 auction against an N800 billion offer, despite receiving subscriptions of N2.045 trillion.
The allotment represented approximately 24.9 per cent of total subscriptions, while stop rates remained unchanged.
The DMO is scheduled to offer another N800 billion in Treasury Bills on November 11, comprising N100 billion each in 91-day and 182-day instruments and N600 billion in 364-day bills. The auction is expected to settle on November 12, when N148.565 billion in Treasury Bills maturities fall due.
The latest liquidity developments follow months of substantial OMO issuance by the CBN.
The FMDA estimates total liquidity inflows of approximately N13.79 trillion in November, about N292 billion higher than its October projection. OMO maturities, Federation Account allocations and Treasury Bills repayments are expected to account for approximately 96.8 per cent of the projected monthly inflows.
In September, the CBN allotted N17.51 trillion in OMO securities against maturities of N10.89 trillion, resulting in a net liquidity withdrawal of approximately N6.62 trillion.
The renewed auction drive highlights the challenge facing monetary authorities in managing the cycle of substantial securities maturities and fresh liquidity injections.
With OMO maturities accounting for nearly 94 per cent of this week’s projected inflows, the extent of today’s allotment and subsequent auctions will determine how effectively the CBN can contain excess cash in the banking system.
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