SAT OCT 03 2026-theGBJournal| Nigeria’s money-market liquidity tightened marginally this week as the Central Bank of Nigeria (CBN) absorbed N4.69 trillion through open-market operations, pushing the overnight rate higher even as substantial excess liquidity remained in the banking system.
The overnight rate rose 3 basis points week-on-week to 20.8%, after OMO primary-market debits of N4.69 trillion exceeded N2.43 trillion in OMO maturities and N162.94 billion in Federal Government bond coupon payments.
Average system liquidity moderated to a net long position of N5.04 trillion, from N5.85 trillion the previous week, as the central bank’s OMO issuance removed a significant amount of cash from the financial system.
However, banks continued to place substantial funds at the CBN’s Standing Deposit Facility, with SDF placements reaching N5.36 trillion, down from N5.78 trillion a week earlier.
The elevated SDF balance points to a sizeable residual liquidity surplus despite the CBN’s aggressive sterilisation through OMO operations.
Treasury bills rally as investors adjust to lower rates
The Treasury bills secondary market remained bullish, with average yields across instruments falling 25 basis points to 18.0%.
Average Nigerian Treasury bill yields declined 8 basis points to 17.8%, reflecting modest buying interest across the curve.
OMO bills recorded a sharper repricing, with average secondary-market yields falling 95 basis points to 18.8%.
The move reflects continued adjustment to the lower interest-rate environment, while unmet demand from the CBN’s Sept. 30 OMO auction also spilled into the secondary market.
At the auction, the CBN offered N2.50 trillion of OMO bills but received N6.40 trillion in subscriptions, more than twice the amount on offer. The central bank ultimately allotted N4.69 trillion.
Stop rates settled at 17.24% for the 147-day bill, 16.94% for the 182-day tenor and 16.23% for the 266-day tenor.
The strong demand at the auction, alongside falling secondary-market yields, points to continued investor appetite for short-term government securities despite the large volume of liquidity being absorbed by the CBN.
Bond market reverses after recent repricing
The Federal Government bond market, however, moved in the opposite direction.
Average bond yields rose 10 basis points to 15.8% as local investors took profits following the recent repricing of government bonds after the rate cut.
The move was uneven across the benchmark curve. Average yields at the short end fell 11 basis points, supported by demand for the March 2027 bond, whose yield declined 80 basis points.
At the middle and long ends of the curve, yields increased 14 and 8 basis points, respectively, driven by selling pressure on the June 2032 and September 2036 bonds. Yields on the two securities rose 61 and 20 basis points, respectively.
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