Analysts Foresee Decline in Rates as CBN Auctions N33.8bn T-Bills

By Modupe Gbadeyanka

Treasury bills worth N33.8 billion would be offered for sale this week via the Primary Market Auction (PMA) by the Central Bank of Nigeria (CBN).

During the exercise, the apex bank will auction the 91-day bills worth N3.39 billion, the 182-day bills worth N16.92 billion and the 364-day bills worth N13.54 billion.

According to analysts at Cowry Asset, the stop rates at this week’s PMA, precisely on Wednesday, will slightly be lower than in the previous session.

“We expect their stop rates to decrease marginally, given the increasing preference for fixed income assets by investors.

“We also expect NIBOR to moderate amid maturing N140.95 billion T-bills,” analysts at the Lagos-based investment company stated.

Business Post reports that at the last PMA held on May 2, 2019, stop rate for the 91-day instrument cleared at 10.00 percent, the 182-day at 12.49 percent and the 364-day at 12.77 percent.

A look at the treasury bills market last week indicated that the CBN auctioned the debt instrument worth N613.26 billion through Open Market Operation (OMO) which offset the matured bills worth N196.41 billion.

Amid financial system liquidity squeeze, NIBOR rose for most tenure buckets: NIBOR for overnight funds rate, 3 months and 6 months tenure buckets rose to 9.17 percent from 5.25 percent, 12.72 percent from 11.88 percent and 14.36 percent from 14.31 percent respectively; however, NIBOR for 1 month moderated to 11.83 percent from 11.84 percent.

Meanwhile, NITTY moved in mixed directions across maturities tracked – yields on 3 months and 6 months increased to 11.51 percent from 10.73 percent and 13.31 percent from 13.27 percent respectively; however, yields on 1 month and 12 months maturities declined to 10.25 percent from 10.84 percent and 14.16 percent from 14.49 percent respectively.