By Samuel Akpan
The Central Bank of Nigeria (CBN) has floated a N2.5 trillion Open Market Operations auction today to almost exactly offset a N2.433 trillion repayment falling due the same day.
The offer covers three tenors of N500 billion in 147-day paper due 23 February 2027, N1 trillion in 182-day paper due 30 March 2027 and N1 trillion in 266-day paper due 22 June 2027.
Bidding was expected to have closed at 10:30am on Tuesday 29 September 2026.
The matched amounts arrive as banks already park more than N6.2 trillion at the Standing Deposit Facility, setting up another large liquidity sterilisation by the apex bank.
CBN market data on Tuesday showed only a N66.765 billion gap between the fresh N2.5 trillion offer and the N2.433 trillion maturity, with the new sale equal to about 102.7% of the repayment.
Longer papers dominate the sale, as the 182-day and 266-day notes make up N2 trillion or 80% of the offer while the 147-day line is the remaining 20%.
Banks had placed about N6.278 trillion at the SDF as of 29 September, up from N6.014 trillion the previous day and N5.899 trillion on 25 September.
That four-day rise equals roughly N379 billion or 6.4% in extra SDF placements.
Opening balances stood at N131.817 billion on 29 September, down 52.5% from N277.741 billion on 28 September but still above the N81.653 billion recorded on 25 September.
Today’s sale caps a month of the strongest OMO demand so far this year after four auctions on 1, 8, 16 and 24 September.
Across those four sales the CBN offered a combined N3.9 trillion and allotted about N12.823 trillion.
Investors lodged N20.58 trillion in bids at those auctions, more than five times the cumulative amount first put on offer.
September subscriptions reached about N20.6 trillion, up from N18.72 trillion in August, a jump the CBN tied partly to opening OMO access to individuals, companies and non-bank firms through deposit money banks.
Stop rates on longer OMO notes fell from 18.99% at the start of September to 17.29% at the 24 September auction even as bids kept dwarfing offers.
The pattern runs past September after the CBN mopped up N4.72 trillion on 26 and 27 August and had already sold N30.12 trillion between January and April.
Demand has stayed heavy even as accepted rates eased through the month.
The 29 September auction comes one week after the Monetary Policy Committee cut the Monetary Policy Rate by 350 basis points to 23% on 22 September.
The CBN called that move a reset to close the gap between its benchmark and money-market rates rather than a simple easing.
The 266-day note is the longest tenor in the current cycle and stretches the maturity wall to 22 June 2027.
The sale follows a similar 5 June episode when the CBN took in N3.04 trillion as a N2.73 trillion repayment matured the same day.
The N2.5 trillion figure is only the amount offered, so the actual liquidity drain will depend on how much is allotted.
Allotment size and the stop rate on the new 266-day paper will decide how much of the N2.433 trillion repayment is locked up again and what price investors accept for cash tied into 2027.
PerSecondNews reports that OMO stop rates have been falling all month, then dropped hard after the 22 September rate cut. Demand went the other way, bigger bids at lower yields.
That is a 170 basis-point fall on the long end from the first sale of the month to the last.
About two-thirds of the drop came in the eight days around the Monetary Policy Committee meeting.
The comparable ~152-day stop rate alone fell 110 basis points between 16 and 24 September.
Shorter paper stayed stickier, on 16 September the 69-day note stopped at 19.25% and the 90-day at 19.05%.
On 24 September the CBN offered a 68-day line and sold none of it; bids sat between 17.79% and 19.18%.
The bank is not paying up at the front of the curve. It is pushing cash into longer bills.
On 24 September the 180-day bill cleared at 16.99%, below the 152-day at 17.29%. That is an inversion: investors accepted less yield to lock money further out.
The 180-day line also took most of the demand — N3.883 trillion of bids, about two-thirds of that day’s book — against a N450 billion offer.
The CBN allotted N1.315 trillion there and N939.6 billion on the 152-day.
The shape is deliberate – rejecting the short tenor and stuffing the long tenors lowers the average cost of the sterilisation and extends the maturity wall into 2027.
Author
Leave a comment