The Central Bank of Nigeria (CBN) raised a total of N804.85 billion at its Open Market Operations (OMO) auction held on Monday, April 29, 2025, as investors continue to show a strong appetite for high-yield securities amid persistent excess liquidity in the financial system and elevated inflation expectations.
The auction attracted total subscriptions worth N1.057 trillion, representing a 111% oversubscription. Although strong, the demand was slightly lower than the previous auction held on April 25, 2025, where the CBN raised N1.008 trillion from N1.391 trillion in subscriptions after offering the two N500 billion bills.
In the latest auction, the CBN offered two long-tenor instruments—329-day and 350-day bills—each at N250 billion. The results revealed a sharp contrast in investor demand between both maturities, with investors overwhelmingly favouring the longer 350-day paper in their bid to lock in higher returns for a longer duration, signalling continued confidence in Nigeria’s sovereign debt and expectations of sustained high interest rates.
350-day bill sees exceptional demand
- The 350-day OMO bill, maturing on April 14, 2026, recorded a massive subscription of N923.60 billion—more than three times the N250 billion offered—highlighting the depth of liquidity in the market and the continued preference for longer-dated instruments. The central bank allotted N698.60 billion at a stop rate of 22.73%, with bid rates ranging between 22.4990% and 22.9700%.
- This robust investor turnout mirrors the trend seen in the previous OMO auction held just four days earlier, where the 319-day instrument attracted N1.062 trillion in subscriptions—its highest for the year—and was allotted N688.30 billion at the same stop rate of 22.73%.
- The consistency in demand for longer-dated bills reflects investor sentiment that the CBN will maintain its current hawkish stance for an extended period, as it seeks to combat inflation and stabilise the naira. Financial institutions, asset managers, and offshore players are therefore increasingly favouring long-term bills to lock in attractive real returns in anticipation of future rate moderation.
329-day bill receives tepid response
- In contrast, the 329-day instrument maturing on March 24, 2026, received relatively weak interest. It attracted a total subscription of N133.25 billion—just over 53% of the N250 billion offered—and the apex bank allotted N106.25 billion. The stop rate was slightly lower at 22.69%, while the bid range came in tighter between 22.3200% and 22.8900%.
- The lower demand for this paper may be attributed to its marginally shorter tenor and the fact that investors have been clustering around the longest available durations in recent auctions. The bid patterns suggest that market participants are keen on maximising yield over a longer horizon, especially given expectations that interest rates may peak soon before a gradual downward adjustment.
What you should know
This auction follows a blockbuster sale on Friday, April 25, 2025, where the CBN offered N500 billion across two maturities and ended up raising N1.008 trillion following a 102% oversubscription. The previous auction’s longer tenor—the 319-day bill—was the most sought-after, and its momentum appears to have carried over into the current auction.
- However, the total amount raised this time—N804.85 billion—is lower than the N1.008 trillion raised in the April 25 sale, primarily due to underwhelming demand for the 329-day paper. Despite that, the consistent over-subscription of the 350-day bill highlights strong market appetite, driven by high liquidity conditions and a limited number of safe, high-yield investment vehicles.
- The sustained interest in OMO bills comes at a time when Nigeria’s money supply continues to expand rapidly. According to the CBN’s March 2025 Money and Credit Statistics, broad money supply (M3) rose by 3.2% month-on-month to N114.22 trillion in March, and by 24% year-on-year from N92.19 trillion in March 2024. This surge in liquidity has amplified demand for risk-free assets, particularly OMO bills which are offering double-digit returns.
- While net domestic assets (NDA) declined by 11.7% to N69.05 trillion, a 38.9% increase in net foreign assets (NFA) to N45.17 trillion indicates stronger capital inflows and external reserves, further boosting market liquidity. This liquidity glut is making monetary tightening more challenging, despite the CBN’s tools such as the 50% Cash Reserve Ratio (CRR)—the highest globally—and the 27.75% benchmark interest rate.
Inflation in Nigeria remains stubbornly high. Headline inflation surged to 24.23% in March 2025 from 23.18% in February, with month-on-month inflation spiking by 3.90%—almost double the rate recorded a month earlier. This elevated inflation, driven by soaring food prices, transport costs, and energy tariffs, continues to erode consumer purchasing power and complicate monetary policy implementation.
OMO auctions have therefore become an essential liquidity sterilisation tool, helping the CBN to absorb excess cash and anchor market interest rates. Through these auctions, the central bank signals its monetary policy direction while guiding yield expectations and dampening speculative activity in the currency and equity markets.
With another Monetary Policy Committee (MPC) meeting on the horizon, market participants will closely watch whether the central bank adjusts rates further or maintains its current course.
