By Dipo Olowookere
There are strong indications that the Central Bank of Nigeria (CBN) might have to raise the stop rates of treasury bills at the primary market today.
Already, market players are seriously anticipating this move from the central bank and if the apex bank expects the exercise to be successful, it may have to succumb to the demands of investors.
With the general elections in the country kicking off next month and more money expected to hit the system through political campaigns as well as foreign investors pulling out funds from the country, the apex bank may be left with no other option than to increase the rates to keep things under control.
At today’s PMA, fresh treasury bills worth N225.45 billion would be auctioned by the central bank to investors.
A breakdown showed that the apex bank will offer to market players the 91-day bills worth N5.85 billion, 182-day bills worth N26.60 billion and 364-day bills worth N193.00 billion.
At the last exercise, the stop rates were kept at 10.90 percent, 13.10 percent and 14.50 percent for the 91-day, 182-day and 364-day bills respectively.
At today’s PMA, Business Post analysts are anticipating a slight hike mostly on the mid-tenor instruments. Going by Tuesday’s Open Market Operations (OMO) by the central bank, a marginal raise in the short and medium ends of the curve will push participation.
We expect the one-year notes to be oversubscribed, which may likely not need an increase in the rates.
