The Central Bank of Nigeria (CBN) will hold a Treasury bills auction on Wednesday, offering ₦81 billion to investors in what is expected to be a relatively modest round compared to previous auctions.
Market analysts anticipate this move could signal a broader liquidity tightening strategy by the apex bank.
Alongside the Treasury bills auction, the CBN is expected to conduct an Open Market Operations (OMO) auction to refinance maturing instruments, potentially mopping up a total of ₦345 billion from the financial system this week. This includes ₦264 billion in maturing OMO bills.
The maturity inflows from both OMO and Treasury bills are projected to increase market liquidity, which could lead to a decline in short-term interest rates. However, analysts expect the CBN to counterbalance the excess liquidity with new OMO issuances, reinforcing its ongoing monetary tightening approach.
Last week, the CBN offered ₦450 billion in Nigerian Treasury bills, split across three tenors: ₦50 billion (91-day), ₦100 billion (182-day), and ₦300 billion (364-day). The auction drew strong interest, with total subscriptions reaching ₦1.31 trillion, up from ₦1.17 trillion in the previous auction, reflecting a bid-to-offer ratio of 2.9x.
The Debt Management Office (DMO) allotted the full ₦450 billion on offer, with stop rates settling at 17.98% for the 91-day bills (down from 18.00%), 18.50% for the 182-day bills (unchanged), and 19.35% for the 364-day bills (down from 19.56%).
In a further sign of its hawkish stance, the CBN last week issued a ₦600 billion OMO offer, receiving robust demand of ₦1.529 trillion and allotting ₦1.512 trillion underscoring investors’ appetite for higher-yielding instruments amid tightening conditions.
The midweek auction will be closely watched by investors and financial analysts for further signals on interest rate direction and liquidity dynamics in the Nigerian financial markets.
