The Central Bank of Nigeria (CBN) has carried out an unusually large Open Market Operations (OMO) auction, absorbing a combined N3.692 trillion across two bills — a 33-day and a 138-day instrument. Although it offered only N600 billion in total (N300 billion each), investor demand far outstripped supply: subscriptions reached N1.525 trillion for the 33-day bill (5.1x oversubscription) and N2.168 trillion for the 138-day bill (7.2x oversubscription). The CBN accepted all bids, setting marginal rates at 21.57% for the short bill and 19.97% for the longer one.
This aggressive full allotment contrasts sharply with the May 12 auction, when the CBN accepted only N116 billion out of N872 billion in bids, rationing allotments. The May 21 acceptance of all subscriptions signals a deliberate move to drain excess liquidity quickly to address inflationary risks and support the naira.
Settlement data show the OMO had an immediate impact on banks’ overnight balances: the Standing Deposit Facility fell from N6.103 trillion on May 20 to N5.797 trillion on May 21 and then to N2.703 trillion on May 22, a two-day drop of over 55%. Opening system balances also contracted by about 23% over three days.
Primary market activity on May 21 was also large: sales (NTBs and FGN bonds) were N829.33 billion, and repayments hit N634.47 billion — suggesting a major maturity injected cash back into the market and helped fuel the heavy OMO subscriptions. Across early May the CBN repaid about N4.78 trillion in two tranches while net OMO issuance for the period was roughly N850 billion. A separate May 19 OMO repayment of N2.247 trillion further increased available cash ahead of May 21.
A direct comparison: May 12 accepted N116 billion versus May 21’s N3.692 trillion — roughly 31.8 times more liquidity absorbed in a single day. Rising domestic borrowing needs (Nigeria’s 2026 budget deficit is N20.12 trillion, with over 70% expected to be domestically financed) are pushing interest rates up and increasing the likelihood of crowding out private-sector credit. With Olayemi Cardoso as Governor, CBN has relied heavily on OMO bills to mop up liquidity, with cumulative OMO sales in the first four months of 2026 around N30.12 trillion.
