CBN’s OMO Blitz Pulls in ₦3.3trn as Investors Chase High Yields

Nigeria’s money market is witnessing one of its strongest waves of investor demand in recent years as the Central Bank of Nigeria’s (CBN) aggressive Open Market Operations (OMO) strategy continues to attract both foreign and domestic capital, reinforcing the naira while tightening its grip on liquidity conditions.

According to Cordros Securities’ Weekly Economic and Market Update: Overview of Markets in the Week Ended June 5, 2026, investor appetite for government securities remained exceptionally strong during the week, with OMO and Nigerian Treasury Bill (NTB) auctions attracting bids far above the amounts on offer.

The development underscores how elevated interest rates have transformed short-term government securities into one of Nigeria’s most attractive investment assets, drawing substantial offshore inflows and encouraging local investors to lock funds into risk-free instruments.

At the centre of the week’s activity was the CBN’s OMO auction, which revealed the scale of investor demand for high-yield naira assets.

Although the apex bank offered ₦600 billion across various maturities, investors submitted bids worth ₦3.3 trillion.

The overwhelming demand prompted the CBN to allot ₦3.04 trillion, more than five times the initial offer.

The strong response highlights the attractiveness of OMO instruments in the current interest rate environment.

Stop rates settled at 21.54 per cent for the seven-day tenor, 21.40 per cent for the 35-day tenor and 20.02 per cent for the 133-day tenor.

For investors, particularly offshore funds, such yields offer an opportunity to earn significant returns while benefiting from relative exchange-rate stability.

This carry-trade appeal appears to be one of the strongest factors driving renewed foreign participation in Nigeria’s financial markets.

The report noted that offshore demand remained robust throughout the week, contributing to a decline in secondary market OMO yields and helping to support the naira.

It stated that foreign inflows generated by the OMO auction outweighed domestic demand for dollars, leading to a 1.0 per cent appreciation of the naira during the week.

It closed at ₦1,361 per dollar, while gross external reserves increased by $456.73 million to $50.04 billion.

The developments suggest that the CBN’s high-yield strategy is achieving two objectives simultaneously: attracting foreign capital and strengthening foreign exchange liquidity.

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The latest figures also reinforce broader trends in capital flows. Total capital importation surged by 61 per cent year-on-year to $10.37 billion in the first quarter of 2026, with money market instruments accounting for a significant portion of foreign portfolio inflows.

According to the report, investment in money market assets recorded a 110.9 per cent increase during the period, underscoring the growing role of government securities in attracting foreign capital.

OMO Dominates as NTBs Remain Attractive

While OMO auctions captured the attention of offshore investors, Treasury bills continued to attract strong domestic demand.

The Debt Management Office (DMO) offered ₦1 trillion worth of Treasury bills during the week, but bids reached ₦2.16 trillion, representing a bid-to-offer ratio of 2.2 times. It eventually allotted ₦1.46 trillion.

Unlike the OMO auction, where yields compressed due to strong demand, Treasury bill stop rates moved higher across all maturities.

Rates rose to 16.05 per cent for the 91-day bill, 16.19 per cent for the 182-day bill and 16.35 per cent for the 364-day bill.

The rise in stop rates suggests that investors demanded higher compensation to absorb the increased volume of government debt.

However, activity in the secondary market painted a slightly different picture.

The Treasury bill yields remained under downward pressure due to strong liquidity conditions and sustained investor interest, even though some successful auction participants engaged in profit-taking after the primary sale.

The contrast between OMO and Treasury bills highlights the different investor bases currently active in the market.

While foreign investors appear more attracted to OMO instruments because of their higher yields and shorter tenors, domestic institutions continue to dominate the Treasury Bill segment.

Liquidity Flood Keeps Yield Pressure Intact

Perhaps the most significant takeaway from the report is the sheer volume of liquidity circulating within the financial system.

During the week, the money market absorbed substantial outflows from fresh OMO and Treasury Bill issuances totalling about ₦4.5 trillion. Yet liquidity remained resilient because of large inflows from maturing securities.

OMO maturities alone injected ₦2.73 trillion into the system during the review period.

Even after accounting for the heavy auction settlements, banks maintained an average net long position of ₦4.66 trillion, reflecting abundant liquidity.

The report also points to another ₦2.09 trillion in OMO maturities expected in the following week.

This means investors will once again have significant cash available for reinvestment, increasing the likelihood that demand for government securities will remain elevated.

For the CBN, the challenge will be balancing its liquidity management objectives with its broader monetary policy goals.

Market analysts believe that if the central bank allows excess liquidity to remain in the system, yields could continue to decline as investors compete for available securities.

However, further aggressive OMO issuances could absorb excess funds and help sustain the current interest rate environment. The situation is particularly serious as inflation risks remain a concern.

Cordros Securities said it expects headline inflation to rise to 16.22 per cent in May 2026, suggesting that the CBN may be reluctant to loosen monetary conditions despite improving foreign exchange dynamics.

For now, the market appears convinced that high yields will remain in place for some time, Pinnacle Daily can report.

The combination of strong liquidity, massive OMO maturities and sustained investor demand may continue to create favourable conditions for government securities, while giving the naira an important source of support.

The result will be a money market that will increasingly be driven by one powerful force: investors’ willingness to deploy trillions of naira into high-yield government instruments, with OMO auctions emerging as the CBN’s most effective tool for attracting foreign capital and managing liquidity.