OMO stop rates drop again as CBN’s latest auction sees N1.88 trillion in subscriptions 

Despite the strong demand, stop rates on the 355-day and 362-day bills declined again, signaling a shift in the fixed-income market as the CBN moderated yields.

The latest auction saw the stop rate for the 355-day bill drop to 19.19% from 21.32% in the previous auction, representing a 2.13 percentage point decline. Similarly, the 362-day bill cleared at 19.45%, down from 21.35%, reflecting a 1.90 percentage point decline.

The drop in stop rates comes amid continued efforts by the CBN to fine-tune liquidity management, balancing inflation control with the need to maintain investor confidence. The high demand for OMO bills suggests that investors remain keen on locking in risk-free yields, even at lower rates.

One key factor influencing rates is the recent rebasing of Nigeria’s Consumer Price Index (CPI) by the National Bureau of Statistics (NBS).

Under the new methodology, inflation for January 2025 was reported at 24.48%, significantly lower than the 34.80% recorded in December 2024 under the old framework.

This revision has fueled expectations that the CBN may not be under pressure to hike rates aggressively, contributing to the recent moderation in OMO yields.

Also, at its February 2025 Monetary Policy Committee (MPC) meeting, the CBN opted to hold the Monetary Policy Rate (MPR) steady at 27.50%, signaling a more cautious stance. The decision was based on the need to assess the impact of the rebased CPI and ensure that the inflation decline is sustained before making further policy adjustments.

However, despite the rate moderation, demand remains exceptionally high, particularly for the 362-day bill, which accounted for almost 60% of total subscriptions.