Central Bank of Nigeria executes massive liquidity drain via OMO auctions

The Central Bank of Nigeria (CBN) is executing aggressive liquidity management through Open Market Operations (OMO). In a recent auction, the bank allocated approximately N3.31 trillion in OMO bills, significantly exceeding the N2 trillion initially offered. This operation resulted in a net liquidity drain of about N1.14 trillion for October, following a N6.62 trillion net drain in September. Investor demand was heavily concentrated in longer-dated instruments, with the 182-day bill accounting for the majority of the allotment.

Simultaneously, the CBN is set to offer N900 billion in Nigerian Treasury Bills (NTBs) for the first auction of the fourth quarter. The offer is structured with N700 billion in 364-day bills, N100 billion in 182-day bills, and N100 billion in 91-day bills, reflecting a sustained investor preference for longer tenors despite declining yields.

Additionally, the Debt Management Office (DMO) has opened subscriptions for two FGN savings bonds. The two-year bond offers an annual interest rate of 13.071 percent, while the three-year bond offers 14.071 percent. These retail-focused securities are priced at N1,000 per unit with a minimum subscription of N5,000.