The Central Bank of Nigeria (CBN) has debited commercial banks’ accounts by N596.47 billion following settlement of Federal Government of Nigeria (FGN) bond sales. The outflow tightened liquidity in the financial system.
Okay News reports that the withdrawals stemmed from the recent Bond Primary Market Auction (PMA). Banks and investors paid for allotted debt instruments, reducing available funds.
Although N537.75 billion returned from Open Market Operation (OMO) maturities last week, bond settlements exceeded inflows. Net liquidity contracted modestly.
The overnight interbank lending rate rose 8 basis points to 22.8 percent. Banks with shortages borrowed at higher costs from those with surplus.
System liquidity remained positive, averaging N2.92 trillion at week-end, down from N3.28 trillion. Large government borrowing can quickly absorb excess cash.
“The bond PMA absorbed a significant amount of excess cash. Although OMO maturities provided support, they were not enough to fully offset the settlement debits, so rates adjusted upward,” analysts noted.
Upcoming inflows include N400 billion from OMO maturities, N281.53 billion from Nigerian Treasury Bills (NTB), and N216.76 billion from FGN bond coupons.
Analysts at Cordros Securities Ltd expect these to ease pressure. Rates should moderate as cash positions improve.
Money market dynamics remain sensitive to government debt issuance timing and size. CBN monetary policy stance influences outcomes.
This episode illustrates the interplay between fiscal borrowing and banking liquidity. Bond settlements via direct CBN debits impact short-term rates.
Large auctions often rely on banks. Balanced liquidity management prevents excessive volatility.
Expected inflows provide relief. They support stable interbank operations amid ongoing reforms.
