OMO Bill Yield Increases as Investors Trim Holdings
The average yield on Nigerian OMO bills climbed to 21.1% in the secondary market, reflecting investors’ measured decisions to adjust their holdings in these short-term investment securities.
The selloffs were triggered despite the financial system’s surplus liquidity, as investor sentiment weakened. Analysts identified the interest rate cut as the key trigger.
Market participants trimmed positions amid tightening spot rates and pricing at the primary market auction, though OMO bills yields remained elevated to keep hot monies.
Importantly, the yields on OMO bills remain attractively high, creating a conducive environment for continued short-term investment for foreign portfolio investors and banks.
Last week, the Central Bank of Nigeria (CBN) proactively issued ₦600 billion in OMO bills with maturities of 6 days, 104 days, and 167 days.
The strong investor appetite, with total subscriptions reaching ₦1.9 trillion and a significant focus on the 167-day paper, indicates a healthy interest in these instruments.
The CBN successfully allotted ₦1.1 trillion, with stop rates recorded at 21.94% for the 6-day bills, 18.45% for the 104-day bills, and 18.77% for the 167-day bills, reflecting a constructive demand focus along the mid-curve.
Recall that the CBN reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5%, the first dovish move after a long period of tightening in a bid to stifle rising inflation and control prices.
This dovish move follows an extended period of tightening aimed at managing inflation and stabilising prices. According to an Ebury report, Nigeria’s real interest rate remains robust, ranking among the highest in global markets.
Additionally, inflation has been gradually easing, with the latest figure at 15.10% in January 2026. Cowry Asset notes that the reduced inflationary pressure provides the CBN with the opportunity to thoughtfully relax monetary conditions without risking stability. Naira Falls on Growing FX Outflow Despite Intervention
