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CBN Returns N3.2trn to Banks as Maturities Outstrip Fresh Auctions in October
The Central Bank of Nigeria (CBN) injected a net N3.20 trillion into the banking system in October after repayments on maturing securities exceeded fresh sales of OMO and Treasury Bills.
Nairametrics analysis of CBN data shows the apex bank raised N7.49 trillion from Open Market Operations and Treasury Bills auctions between October 2 and 29, against N10.69 trillion in maturities returned to investors.
This means only about 70 per cent of maturing funds were rolled over, marking a reversal from September when the CBN mopped up a net N6.62 trillion through OMO sales alone.
During the month, the CBN held three OMO and three Treasury Bills auctions, with total subscriptions of N13.23 trillion, but allotted only 57 per cent of bids, indicating selective acceptance.
OMO auctions accounted for N6.18 trillion in sales against N6.71 trillion in maturities, leaving a net repayment of about N527 billion, while Treasury Bills raised N1.31 trillion against N3.985 trillion in repayments, creating a gap of N2.68 trillion.
The October 28 Treasury Bills auction was the most restrained, with only N71.16 billion allotted from N1.908 trillion in subscriptions, leaving 96 per cent of bids unfilled, while the last two auctions of the month combined raised just N316.10 billion from N4.19 trillion in demand.
The liquidity surplus coincided with elevated deposits at the CBN’s Standing Deposit Facility and a drop in short-term yields, with SDF balances hitting N8.41 trillion on October 28 before easing to N7.19 trillion on October 30.
Stop rates also declined, with the 138-day OMO rate falling to 17.63 per cent on October 22 from 20.01 per cent in August, the 180-day at 17.14 per cent, and the 364-day Treasury Bill at 15.80 per cent, a 238 basis points drop that followed the Monetary Policy Committee’s cut of the Monetary Policy Rate to 23 per cent in September.
Analysts offered differing views on the impact, with Globalview Capital CEO, Aruna Kebira, saying the higher repayments reduce the CBN’s outstanding obligations and may support liquidity after the Dangote Refinery public offer, while Agusto & Co’s Head of Financial Institutions Ratings, Olubunmi Ayokunle, noted that a large share of OMO holders are foreign investors, so repayments do not automatically translate to domestic liquidity.
The N3.20 trillion estimate reflects only the gap between specified maturities and fresh allotments and not total system liquidity, as government spending, forex operations and other transactions also influence conditions, but for banks and investors, October was marked by high SDF balances and lower yields, with the outlook hinging on future OMO sales and fiscal financing needs.
