By Onu Okorie

Investor appetite for high-yield government paper reached extraordinary levels on May 21, 2026, as the Central Bank of Nigeria’s (CBN) Open Market Operations (OMO) auction attracted a staggering N3.692 trillion in subscriptions against a combined offer of just N600 billion — an oversubscription of more than six times the amount on offer.

The auction, which featured a 33-day and a 138-day bill, laid bare the sheer volume of idle cash circulating in Nigeria’s banking system and signalled a dramatic escalation in the CBN’s campaign to drain excess liquidity from the financial system.

The oversubscription was striking across both instruments. On the shorter 33-day bill, investors submitted N1.525 trillion in bids against a N300 billion offer — a 5.1 times oversubscription. Demand was even more intense on the 138-day bill, where N2.168 trillion in bids flooded in against the same N300 billion offer, representing a remarkable 7.2 times oversubscription.

In a decisive departure from its recent posture, the CBN accepted every single bid received — allotting the full N3.692 trillion rather than rationing supply as it had done previously. The 33-day bill cleared at a marginal rate of 21.57%, while the longer-dated 138-day instrument settled at 19.97%.

The scale of the May 21 auction stands in sharp relief against the CBN’s previous OMO session on May 12, when the apex bank accepted only N116 billion out of N872 billion in total subscriptions. On the 35-day bill specifically, just N25 billion was allotted despite N761 billion in investor bids.

The contrast between the two auctions is stark: the CBN absorbed approximately 31.8 times more liquidity on May 21 than it did nine days earlier — a shift that analysts described as a complete reversal of strategy, from selective rationing to full acceptance of all bids.

The flood of investor funds did not emerge in a vacuum. A large primary market repayment of N634.47 billion on May 21 returned matured securities cash to investors on the same day as the auction. Additionally, a N2.247 trillion OMO repayment recorded on May 19 had already injected substantial liquidity into the system days earlier, priming the market for the aggressive bidding that followed.

The CBN’s willingness to mop up nearly N3.7 trillion in a single session underscores the scale of excess liquidity in the system and the determination of monetary authorities to prevent it from fuelling inflation or weakening the naira. The Standing Deposit Facility — through which banks park overnight surplus funds with the CBN — collapsed by over 55% between May 20 and May 22, from N6.103 trillion to N2.703 trillion, confirming the direct impact of the absorption.

With Nigeria’s 2026 budget deficit standing at N20.12 trillion and over 70% to be financed through domestic borrowing, the CBN’s reliance on OMO bills as its primary liquidity management tool shows no signs of easing. Cumulative OMO sales in the first four months of 2026 have already reached approximately N30.12 trillion.