CBN faces N8.57 trillion liquidity surge as OMO, Bond maturities hit banking system

Nigeria’s apex bank could face significant upsurge in system liquidity up to about N8.57 trillion this week beginning Monday, September 28, following a potential N2.59 trillion injection from maturing Open Market Operations (OMO) bills and bond coupons.

Nairametrics’ analysis of Central Bank of Nigeria (CBN’s) financial data shows that net system liquidity had already strengthened to N5.98 trillion in the week ended Friday, September 25, from N2.86 trillion in the prior week.

The projected increase, driven by N2.43 trillion in OMO maturities and N164 billion in bond coupons, could set the stage for another liquidity mop-up operation by the CBN.

Banking Liquidity Nears N8.57 trillion:

Banks placed more than N7 trillion at the Standing Deposit Facility (SDF) during the past week, underscoring the substantial surplus liquidity available within the financial system.

• The banking system also received roughly N2.3 trillion from OMO repayments on Tuesday, September 22, contributing significantly to the increase in net liquidity.
• Another N2.43 trillion in OMO maturities is scheduled for settlement this week, potentially providing a further boost to available cash.
• An additional N184 billion in bond coupon payments earlier on Monday, September 21, would bring the potential combined injection to N2.594 trillion, lifting net system liquidity to approximately N8.57 trillion if fully retained.
• Money-market rates responded sharply to abundant liquidity and the Monetary Policy Committee’s decision to cut the benchmark rate by 350 basis points to 23% at its September 22, 2026 meeting.
• The overnight rate declined 147 basis points week-on-week to 20.77%, while the funding rate fell 160 basis points to 20.40%, with declines also recorded across the NIBOR curve.

The liquidity build-up is consistent with a pattern seen throughout 2026, as banks have routinely parked substantial cash with the CBN through the SDF even after large liquidity withdrawals.

Treasury Bills auctions reflect rate cut:

The secondary Treasury bills market turned decisively bullish following the MPC’s easing action, with the strongest repricing recorded at the longer end of the curve.

• Yields contracted by 29 basis points, 114 basis points and 123 basis points across selected maturities, pulling the average Nigerian Treasury Bills (NTB) yield down 90 basis points to 17.89%.
• At the NTB auction, the DMO offered N500 billion across the 91-day, 182-day and 364-day maturities, attracting N4.2 trillion in subscriptions but allotting N497 billion.
• Stop rates fell to 15.50% for the 91-day bill, 15.80% for the 182-day instrument and 15.89% for the 364-day bill.
• At the CBN’s OMO auction, on Thursday September 24, 2026 N1 trillion was offered across the 68-day, 152-day and 180-day maturities, attracting N6.1 trillion in subscriptions before N2.3 trillion was allotted.
• No allotment was recorded for the 68-day instrument, while the 152-day and 180-day bills cleared at 17.29% and 16.99%, respectively.

The heavy oversubscription despite falling yields echoes the broader Q3 2026 NTB Issuance Programme, under which the CBN allotted N8.14 trillion across the quarter’s auctions, 40.34% above the N5.8 trillion originally targeted.

CBN sterilisation faces fresh test:

The MPC’s decision to cut the Monetary Policy Rate by 350 basis points to 23% at its September 22 meeting marked the sharpest single-meeting reduction of the current easing cycle.

• Rate cut was accompanied by a recalibration of the Standing Facilities Corridor to +50/-300 basis points around the MPR, resetting the Standing Lending Facility to 23.50% and the Standing Deposit Facility to 20.00%.
• Nigerian Treasury Bills stop rates fell across all tenors immediately following the rate cut, extending the repricing into the secondary market.
• The overnight and funding rates are expected to trade closer to the lower end of the repriced corridor, supported by abundant system liquidity.
• Continued CBN sterilisation through further OMO sales could, however, moderate the pace of the ongoing fixed-income rally.
• The projected N8.57 trillion liquidity position would represent one of the highest levels recorded this year, following the close of the CBN’s Q3 NTB programme above target.

The coming sessions will therefore provide an early test of how aggressively the CBN uses sterilisation to manage liquidity and the transmission of its newly recalibrated, more accommodative monetary policy stance.