CBN Likely to Offer PMA Rates at Over 14%

By Modupe Gbadeyanka

On Wednesday, October 31, 2018, the Central Bank of Nigeria (CBN) will conduct the sale of treasury bills via primary market.

At the last exercise held on October 17, 2018, the 91-day, 12-day and 364-day bills cleared at 10.96 percent, 12.69 percent and 13.45 percent respectively.

But analysts at Business Post anticipate that the rates would be raise higher than the rates offered two weeks ago.

“The PMA rates would be raised above 14 percent on Wednesday by the central bank,” Business Post analysts forecast.

At the OMO auction last Thursday, the apex bank offered the one-year bill at 14.50 percent, while the 91-day and 182-day instruments were offered at 11.50 percent and 13.00 percent respectively.

Recall that few months ago, Business Post analysts had projected that the rates would first rise above 13 percent and move close to 16 percent before the end of 2018.

The prediction was made due to the fact that the CBN will make efforts to control the massive exit of foreign portfolio investors (FPIs) from Nigeria by offering attractive rates to them.

Also, as the 2019 general elections draws near, more money would be released into the economy and to curb its effect, the apex bank would want to slightly raise rates to control inflation.

Since the United States Fed raised rates, FPIs have been leaving emerging markets, including Nigeria, because of fear of the unknown.

During anticipated Wednesday’s sale of fresh treasury bills, the bankers’ bank would offer a total of N145.29 billion worth of the instrument.

A breakdown indicates that 91-day bills worth N9.54 billion, 182-day bills worth N47.71 billion and 364-day bills worth N88.04 billion would be auctioned to investors.