N1.53 trillion inflows boost banking liquidity as OMO maturities dominate

Nume Ekeghe

The country’s financial system is set to receive an estimated N1.53 trillion in liquidity this week from maturing fixed‑income instruments, easing money‑market conditions after the Central Bank of Nigeria (CBN) intensified liquidity sterilisation in the previous week.

The Weekly Market Snapshot released by the Financial Markets Dealers Association (FMDA) shows that the projected inflows are slightly higher than the N1.48 trillion expected in the preceding week and should support liquidity levels across the banking system.

A breakdown of the expected inflows indicates that Open Market Operations (OMO) maturities will account for the largest share at N1.237 trillion, representing about 81 percent of the total anticipated liquidity. Treasury bill maturities are projected at N139.06 billion, while Federal Government bond coupon payments are expected to inject N145.92 billion into the market. Corporate bond coupon payments and commercial paper maturities are estimated at N10.36 billion and N1.51 billion respectively.

The FMDA stated: “Looking ahead, about N1.53 trillion is expected from maturing securities this week, slightly higher than the N1.48 trillion expected last week. OMO maturities account for approximately 81 percent of the projected inflows.”

The anticipated liquidity injection follows the apex bank’s withdrawal of significant funds from the financial system through its liquidity management operations.

According to the report, average system liquidity declined by 1.10 percent to N4.61 trillion during the review period as the CBN stepped up its liquidity sterilisation activities.

The association noted: “Average system liquidity declined by 1.10 percent to N4.61 trillion, as the CBN intensified its liquidity sterilisation efforts, withdrawing an estimated N3.83 trillion from the financial system.”

Despite the sizeable withdrawals, overnight funding conditions remained relatively stable, with the Nigerian Overnight Funding Rate (NOFR) closing at 22 percent during the period.

In the fixed‑income market, investors continued to demand higher yields amid tighter liquidity conditions and expectations of sustained monetary tightening. Average FGN bond yields rose by 31 basis points to 16.71 percent, reflecting bearish sentiment across the market. Treasury bill yields also moved higher, particularly at the longer tenors, pushing the average yield up by 45 basis points to 17.77 percent.

FMDA said: “FGN bond yields trended higher across most maturities during the week, with the average yield rising by 31 bps to 16.71 percent, reflecting bearish sentiment.”

The report added: “Treasury bill yields also moved upward, particularly at the longer tenors, pushing the average yield higher by 45 bps to 17.77 percent as investors demanded higher returns.”

According to FMDA, “Secondary market activity weakened during the week, with FGN bond trading volume declining by 25 percent WoW, while Treasury bill turnover fell by 55 percent WoW.”