CBN executes over N5 trillion debt repayments as Banks’ deposit placements fall

The Central Bank of Nigeria (CBN) undertook more than N5 trillion in debt repayments in the past week, between Friday, November 14 and Friday, November 21, a period marked by declining bank deposit placements and heightened volatility.

CBN’s financial data monitored by Nairametrics during the review period indicate that the apex bank repaid N3.9 trillion in Open Market Operation (OMO) obligations and N1.2 trillion in primary market instruments, even as banks sharply cut back the funds they placed with the regulator.

The week opened with repayments plunging from N2.55 trillion on November 14 to N1.36 trillion on November 18; a steep N1.18 trillion reduction that signalled fewer maturing bills and tightening liquidity.

On the sales side, OMO sales skyrocketed to N2.97 trillion between November 17 and 18, representing one of the biggest single-day liquidity absorption exercises. But the intervention was short-lived. By November 19, sales slowed to N903.35 billion.

Heavy maturities of N1.2 trillion in Primary Market repayments 

The CBN also settled N1.2 trillion in primary market repayments, underscoring another major debt cycle managed during the week.

The most notable payout occurred on November 20, when Primary Market repayments hit N689.55 billion before collapsing to N231.28 million on November 21.

Earlier in the week, repayments stood at N254.83 billion on November 17 and 18, an increase of N254.56 billion from November 14.

Analysts attribute the midweek spike to clustered NTB and bond maturities.

Primary market sales also mirrored volatility. The government raised about N1.09 trillion through NTBs and FGN bonds on November 20.

SDF plummets as banks withhold excess cash 

There was a sharp drop in bank placements at the CBN’s Standing Deposit Facility (SDF).

The balance fell from N2.50 trillion on November 19 to N1.65 trillion on November 20, and further to N1.15 trillion on Friday, November 21; a combined fall of N1.35 trillion in 48 hours.

Bank opening balances also reflected stress, dropping from N210.75 billion on November 19 to N145.28 billion a day later, before edging up to N150.18 billion on November 21.

Liquidity volatility intensifies  

The combination of massive debt repayments, erratic OMO issuance, and dwindling bank deposits points to liquidity volatility.

For now, the apex bank’s aggressive N5.1 trillion repayment during the week underscores the scale of debt maturities and the delicate liquidity balancing act it must maintain as more maturities loom in December, the last month of the year 2025.(Nairametrics)