Held on Friday, October 31, the auction offered ₦300 billion each across 46-day and 60-day maturities, amounting to a total offer of ₦600 billion. Despite this, total sales amounted to just ₦1.11 billion, even though subscriptions reached ₦359.28 billion at a stop rate of 21.69 percent — underscoring weak demand and a widening disconnect between market expectations and the CBN’s target yields.
According to Olaolu Boboye, Senior Economist at CardinalStone Partners, the outcome reflects the CBN’s reluctance to issue longer-dated bills due to rollover risks.
“The recent auction size suggests that the CBN does not want to sell long-tenor bills because of rollover concerns,” Boboye noted.
The 46-day bill saw minimal interest, recording just ₦74.10 billion in subscriptions and no sales, as the bids fell outside the bank’s acceptable range. The 60-day bill fared slightly better with ₦285.18 billion in bids, though still below the ₦300 billion on offer.
Analysts at Rhodium Capital Management observed that investor appetite has shifted toward higher yields, with bids reaching as high as 24.99 percent for the short-dated paper. They said the CBN’s refusal to meet those pricing levels suggests the operation was more “tactical than driven by immediate funding needs.”
“Given the liquidity backdrop and the expected maturities in the coming days, investors may be waiting for another auction with more attractive tenors and yields,” the firm stated. “Unless the CBN adjusts its rate expectations or tenor structure, demand at the short end may remain selective.”
In recent months, the CBN has introduced ultra-short OMO maturities such as 46- and 60-day bills, a move that has influenced pricing behavior as investors demand premiums to compensate for limited duration and reinvestment risk.
Matilda Adefalujo, a fixed-income analyst at Meristem Securities, said the apex bank’s approach indicates a shift toward using OMO primarily as a liquidity management tool rather than a conventional investment instrument.
“Liquidity has been very high in the system — around ₦4 trillion before Monday’s FGN bond auction, and about ₦2 trillion as of Thursday,” she noted. “The CBN appears focused on tightening excess liquidity rather than satisfying yield-hungry investors.”
The weak auction outcome reflects a delicate balancing act for the central bank: managing system liquidity and inflationary pressure while keeping yields attractive enough to sustain market participation. Analysts expect the next OMO sale to provide clearer signals on whether the CBN will recalibrate its tenor mix or pricing stance to restore investor confidence.