CBN faces N8.57tn liquidity surge as OMO maturities, Bond coupons hit market

Nigeria’s banking system is heading into a major liquidity build-up this week, with as much as N2.59 trillion potentially entering the financial system from maturing Open Market Operations (OMO) bills and bond coupon payments.

Analysis of Central Bank of Nigeria (CBN) financial data shows that net system liquidity had already risen to N5.98 trillion in the week ended Friday, September 25, from N2.86 trillion the previous week.

If the incoming funds are fully retained by banks, system liquidity could climb to approximately N8.57 trillion, one of the highest levels recorded this year.

The projected injection comprises about N2.43 trillion in OMO maturities and roughly N164 billion in bond coupons, potentially increasing the amount of cash available to banks and other financial institutions.

The development could also trigger another round of liquidity sterilisation by the CBN as the apex bank seeks to balance its recent monetary easing with the need to contain excess cash in the system.

Banks had already placed more than N7 trillion with the CBN through the Standing Deposit Facility (SDF) during the previous week, highlighting the extent of surplus liquidity.

The banking system also received about N2.3 trillion from OMO repayments on September 22, which contributed significantly to the liquidity increase.

Rate cut fuels market repricing

The liquidity build-up coincides with the CBN’s decision to cut the Monetary Policy Rate (MPR) by 350 basis points to 23 per cent at its September 22, 2026 Monetary Policy Committee meeting.

Following the decision, the overnight rate fell by 147 basis points week-on-week to 20.77 per cent, while the funding rate declined by 160 basis points to 20.40 per cent.

Rates across the Nigerian Interbank Offered Rate (NIBOR) curve also declined as the market adjusted to the more accommodative monetary policy stance.

The CBN simultaneously recalibrated its Standing Facilities Corridor to +50/-300 basis points around the MPR, leaving the Standing Lending Facility at 23.50 per cent and the Standing Deposit Facility at 20 per cent.

Treasury bill yields decline

The easing cycle has also triggered a strong rally in the Treasury bills market, with the sharpest repricing occurring at the longer end of the curve.

Average Nigerian Treasury Bills yield fell by 90 basis points to 17.89 per cent, while selected maturities recorded yield declines of 29, 114 and 123 basis points.

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At the latest Nigerian Treasury Bills auction, the Debt Management Office offered N500 billion across 91-day, 182-day and 364-day instruments.

Investors submitted bids worth N4.2 trillion, although only N497 billion was allotted.

Stop rates fell to 15.50 per cent for the 91-day bill, 15.80 per cent for the 182-day instrument and 15.89 per cent for the 364-day bill.

At the CBN’s September 24 OMO auction, N1 trillion was offered across three maturities, attracting N6.1 trillion in subscriptions. The apex bank eventually allotted N2.3 trillion.

No allotment was made for the 68-day instrument, while the 152-day and 180-day bills cleared at 17.29 per cent and 16.99 per cent respectively.

The strong demand came despite falling yields and followed the CBN’s Q3 2026 NTB issuance programme, under which N8.14 trillion was allotted, exceeding the original N5.8 trillion target by 40.34 per cent.

The projected liquidity surge will test the CBN’s approach to managing excess cash following its latest rate cut.

While abundant liquidity could keep money-market rates close to the lower end of the newly adjusted corridor and support further gains in fixed-income securities, additional OMO sales could absorb part of the excess funds.