The Central Bank of Nigeria (CBN) began the 2026 monetary year on a firm footing, as its first Open Market Operations (OMO) auctions attracted strong investor interest, with total subscriptions reaching ₦2.727 trillion across medium-term maturities.
The outcome underscores the apex bank’s continued tight liquidity stance, with stop rates remaining elevated and clustered between 19.34 per cent and 19.41 per cent—signalling limited appetite for an early easing of monetary conditions.
At the January 6, 2026, auction, demand was heavily skewed toward longer-dated instruments. The 210-day OMO bill attracted subscriptions of ₦2.451 trillion, dwarfing the ₦277 billion recorded for the shorter 161-day tenor.
In response, the CBN fully allotted the longer-dated paper, which matures in August 2026, indicating a clear preference for locking up liquidity over an extended period.
Under the auction, the CBN offered ₦300 billion per tenor. For the 161-day bill, maturing on June 16, 2026, subscriptions of ₦277 billion translated into allotments of ₦259 billion at a stop rate of 19.34 per cent. The 210-day bill, maturing on August 4, 2026, cleared at a marginal rate of 19.40 per cent, with the full ₦245.08 billion on offer allotted despite the overwhelming demand.
Stop rates at the auction were broadly in line with outcomes from the late-December 2025 OMO auctions, where marginal rates ranged between 19.35 per cent and 19.41 per cent. The stop rate represents the highest accepted yield at which the total amount offered is fully allotted and serves as the clearing yield for the auction, while successful bid rates reflect the individual yields submitted by winning bidders.
The persistence of near-20 per cent OMO yields highlights the CBN’s continued focus on inflation containment and exchange-rate stability, even as concerns about economic growth persist.
While demand has remained robust, allotments have been selective. At the December 30, 2025, auctions, the 168-day OMO attracted ₦121 billion in bids but saw only ₦75 billion allotted, while the 210-day paper recorded ₦119.35 billion in successful bids out of ₦121.45 billion subscribed. This pattern reflects the CBN’s tactical approach to liquidity management.
By contrast, the full allotment of the longer tenor at the January 2026 auction reinforces the central bank’s bias toward longer-dated instruments, rather than relying heavily on short-term bills. Across the four auctions referenced, net sales stood consistently at ₦300 billion per offer, pointing to a deliberate and sustained liquidity withdrawal strategy.
OMO instruments are used by the CBN to absorb excess liquidity and stabilise the financial system, rather than to fund government spending like Treasury Bills or bonds.
Typically, when inflationary pressures rise or the naira weakens, the CBN increases OMO issuance at higher interest rates to mop up liquidity from the banking system.
However, large and frequent OMO issuances also mean that short-term obligations are continually rolled over, often at higher rates, transferring a significant interest burden to the CBN and, by extension, the broader public sector.
While the aggressive OMO programme has tightened liquidity and reinforced the CBN’s anti-inflation stance, it has also contributed to one of the heaviest short-term interest burdens Nigeria has seen in recent years.
