THE Central Bank of Nigeria (CBN) sold N17.51 trillion worth of Open Market Operations (OMO) bills in September 2026, significantly expanding the amount of short- and medium-term securities held by investors as the government and monetary authorities continue to tap the domestic financial market.
Although the apex bank also returned N10.89 trillion to investors through maturing OMO bills during the month, the fresh sales exceeded repayments by about N6.62 trillion, resulting in a net liquidity withdrawal from the banking system.
The scale of the transactions comes against a broader increase in domestic borrowing through government securities. In the third quarter (Q3) of 2026, Nigerian Treasury Bills allotments reached N8.14 trillion, exceeding the Debt Management Office (DMO)’s N5.8 trillion target by N2.34 trillion.
While OMO bills are primarily a monetary-policy instrument used by the CBN to manage liquidity, their large-scale issuance means banks and other investors are committing substantial funds to government-linked securities rather than keeping the funds as cash or deposits.
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N10.89trn returned, N17.51trn raised
The CBN conducted five OMO auctions on September 1, 8, 16, 24 and 29, with total allotments of about N17.51 trillion.
Over the same period, five batches of OMO bills matured, releasing approximately N10.89 trillion back into the financial system.
The repayments represented about 62 percent of the month’s gross OMO sales, meaning most of the money raised through the new auctions effectively replaced securities that had already matured.
The CBN repaid N62 billion on September 7, followed by N3.07 trillion on September 8. Another N3.06 trillion matured on September 15, while N2.27 trillion was repaid on September 22.
A further N2.433 trillion was returned to investors on September 29.
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Against those repayments, the CBN allotted N2.88 trillion on September 1, N4.40 trillion on September 8, N3.29 trillion on September 16, N2.255 trillion on September 24 and N4.686 trillion on September 29.
READ ALSO: How Nigeria’s public debt jumped by N14.61tn in 2025 – DMO
Borrowing and liquidity management converge
The September OMO activity highlights the close interaction between Nigeria’s borrowing requirements and monetary liquidity management.
The CBN’s OMO programme allows the apex bank to absorb excess cash from banks and other financial institutions by selling securities. When those securities mature, however, the principal is returned to investors, creating a fresh injection of liquidity.
The CBN itself has previously described this cycle as a challenge for liquidity management, noting that OMO repayments can offset part of the initial liquidity drainage.
This explains why the N17.51 trillion headline sales figure does not translate into an equivalent N17.51 trillion reduction in liquidity.
Instead, the September transactions produced a net withdrawal of about N6.62 trillion after accounting for the N10.89 trillion returned through maturities.
Longer-dated securities extend repayment cycle
The CBN also increasingly turned to longer-dated instruments during September, potentially extending the period before another large wave of repayments reaches the financial system.
At the September 29 auction, the apex bank introduced a 266-day OMO bill maturing in June 2027. The instrument attracted N4.543 trillion in subscriptions against an initial N1 trillion offer.
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The CBN eventually allotted N2.996 trillion on the 266-day paper at a stop rate of 16.23 percent. The 182-day and 147-day instruments cleared at 16.94 percent and 17.24 percent, respectively.
The shift towards longer maturities means that a portion of the liquidity absorbed in September will remain tied up until 2027 rather than returning to the banking system within a few months.
Investors pour funds into government securities
Investor appetite for domestic government-linked securities remained strong despite declining yields.
Across the first four September OMO auctions, investors submitted N20.58 trillion in bids against only N3.9 trillion offered, with N12.823 trillion allotted.
The September 29 auction pushed total monthly OMO allotments to about N17.51 trillion.
The strong demand coincided with falling stop rates on longer-tenor instruments, suggesting that investors continued to absorb large volumes of government securities even as returns declined.
The development comes as Nigeria relies heavily on domestic debt markets to finance government spending and manage its fiscal deficit. The CBN’s 2026 macroeconomic outlook projects that public debt dynamics will continue to be influenced by new borrowing, with domestic financing remaining an important component of the government’s funding strategy.
Net effect: N6.62trn liquidity withdrawal
The September figures therefore tell two sides of the same story.
The CBN returned N10.89 trillion to investors as previously issued OMO bills matured, but it simultaneously sold N17.51 trillion in new securities.
The result was a net N6.62 trillion withdrawal from the financial system.
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For the wider domestic debt market, the large OMO volumes add to the substantial amount of government-related securities competing for investor funds alongside Treasury bills and FGN bonds.
At the same time, the CBN’s decision to replace maturing instruments with longer-dated paper means the central bank is not simply recycling old debt; it is also extending the maturity profile of the liquidity it absorbs from the banking system
OMO, bond, T-bills sales are forms of borrowing. The nation’s public debt stock climbed to N166.79 trillion as of June 30, 2026, representing a N7.44 trillion increase in three months.
