Hedge funds chase CBN bills as OMO auction pulls N4.26tn bids
By Aboki Forex —
Hedge funds and other yield-seeking investors piled into Nigerian Open Market Operations bills at the Central Bank of Nigeria’s latest auction, with total subscriptions hitting N4.26tn. The demand came even after the CBN cut stop rates on both instruments offered at the 26 August, 2026 auction, a sign that investors are still chasing high naira returns.
The CBN offered N1tn across 97-day and 132-day OMO bills but received bids worth more than four times the amount on offer. Investors put N783bn into the 97-day bill against an offer of N500bn, while the longer-dated 132-day instrument drew N3.48tn against the same N500bn offer.
Allotments and stop rates
The central bank allotted N613bn on the 97-day bill and N2.18tn on the 132-day instrument, bringing total allotment to N2.80tn. That is almost three times the scheduled N1tn offer and underlines the scale of liquidity the CBN is absorbing from the financial system through OMO operations.
The 97-day bill cleared at 19.90 per cent, down 49 basis points from 20.39 per cent at the previous auction. Its true yield was approximately 21.02 per cent. For the 132-day bill, the stop rate fell 36 basis points to 19.65 per cent from 20.01 per cent, while the effective yield stood at about 21.16 per cent.
Why investors are buying
Analysts say the auction highlights the attraction of CBN bills to investors seeking to lock in high naira returns amid strong liquidity and declining nominal yields. The concentration of demand in the 132-day instrument suggests investors were willing to commit funds for longer in exchange for a slightly higher effective return.
The result signals that competition for high-yielding government securities remains intense, even as the CBN gradually reduces nominal rates. Hedge funds and other sophisticated investors are tapping effective yields above 21 per cent, making OMO bills an attractive avenue for deploying naira liquidity.