By Opeyemi Adelakun
The Central Bank of Nigeria (CBN) is seeking to absorb excess funds from the banking system through a fresh N2tn Open Market Operations (OMO) bills offer, following a surge in liquidity to N6.283tn.
Data from the Financial Markets Dealers Association showed that banking system liquidity rose from N3.709tn to N6.283tn in the week ended October 16, representing a 69.39 per cent increase.
The CBN scheduled the auction for Thursday, October 22, with N1tn allocated to 138-day bills and another N1tn to 180-day bills. The instruments are due to mature on March 9 and April 20, 2027, respectively.
The offer follows the repayment of approximately N2.41tn in maturing OMO bills on October 13, which released substantial funds into the banking system. Banks subsequently maintained net placements above N6tn at the CBN’s Standing Deposit Facility through October 16.
The facility enables eligible financial institutions to deposit surplus funds with the apex bank in exchange for interest. High placements can therefore indicate that banks have substantial funds available beyond their immediate needs.
The FMDA projected that OMO bills worth N2.067tn would mature during the week beginning October 19. The new N2tn offer is equivalent to approximately 96.8 per cent of the expected maturities.
Nevertheless, the final impact on liquidity will depend on how much the CBN allots at the auction, alongside maturing securities and other financial-system transactions.
The operation follows an October 6 auction in which the CBN allotted about N3.31tn despite an initial offer of N2tn. Investors submitted bids worth N3.51tn, demonstrating demand above the announced offer.
Accepted yields at that auction stood at 17.22 per cent for the 147-day bill and 16.92 per cent for the 182-day instrument, lower than the rates recorded on September 29.
The CBN also withdrew approximately N6.62tn in net liquidity through OMO transactions in September, selling N17.51tn in bills against maturities of N10.89tn.
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