Analysts Predicts Further Cut in T-Bills Rates This Week

By Modupe Gbadeyanka

The Central Bank of Nigeria (CBN) at the last issuance of fresh treasury bills at the primary market auction reduced the stop rates of the debt instruments.

This week, the apex bank would be conducting another exercise and according to analysts at Cowry Asset, investors should expect further reduction in the rates.

Business Post reports that on Wednesday, the CBN will auction T-bills worth N223.23 billion to market players in three different maturities.

A breakdown of the forthcoming sale showed that the central bank would offer N28.08 billion worth of the 91-day bills, N58.68 billion worth of the 182-day instrument and N136.52 billion worth of the 364-day bills.

“We expect their stop rates to decrease marginally due to increase demand amid boost in system liquidity which, in addition to maturing T-Bills worth N88.68 billion and the effect of FAAC inflows of N762.5 billion, are also expected to result in decline in NIBOR.

Last week, despite the absence of treasury bill auctions by CBN and the matured T-bills worth N90.07 billion through Open Market Operations (OMO), the financial system was still drained of liquidity.

Consequently, NIBOR rose for most tenor buckets: NIBOR for overnight funds, 3 month and 6 months tenure buckets increased to 21.05 percent from 12.45 percent, 11.96 percent from 11.45 percent and 12.71 percent from 12.46 percent respectively. However, NIBOR for one-month tenure buckets moderated to 10.81 percent from 10.84 percent.

Meanwhile, NITTY rose for most maturities tracked amid renewed sell pressure as investors demand for better yields increase – yields on, 1 month, 3 months and 6 months maturities fell to 9.03 percent from 8.99 percent, 10.58 percent from 9.25 percent and 11.43 percent from 10.77 percent respectively. However, yield on 12 months maturity declined to 12.05 percent from 12.36 percent.