CBN to Sell N151bn T-Bills Wednesday, May Maintain Rates

By Dipo Olowookere

The Central Bank of Nigeria (CBN) will on Wednesday, November 27, 2019 approach the primary market again for the sale of treasury bills worth N150.6 billion to investors.

As usual, the apex bank will offer the debt instrument in three different maturities; 91-day, 182-day and 364-day bills. A further analysis showed that the CBN will offer for sale 91-day bill worth N24.37 billion, 182-day bill worth N23.16 billion and 364-day bill worth N103.70 billion.

According to analysts at Business Post, the central bank may likely not tamper with the stop rates, which dropped to single digit on the average at the last exercise.

However, if there would be adjustment in the rates, it would likely be on the one-year instrument, which cleared at 10.00 percent at the previous PMA and this change would most likely be marginal.

The lowering of the treasury bills rates has made investors to lose interest in the investment tool, with some already trying out other options, including looking at the Ghanaian T-bills market, which still has rates as high as 17 percent. Since the CBN reduced the rates, the Nigerian stock market has been vibrant, recording consecutive gains.

At the fixed income market this week, treasury bills worth N503.30 billion will mature via the primary and secondary markets which will more than offset T-bills worth N150.60 billion to be auctioned by CBN via the primary market.

With anticipated financial liquidity ease in the money market and the effect of the recently disbursed N702 billion by the Federation Account Allocation Committee (FAAC), NIBOR is expected to decline in the week.

Last week, NIBOR for overnight funds declined to 4.45 percent from 13.55 percent amid the liquidity impact of the matured OMO-bills worth N352.00 billion as well as the absence of OMO sales by CBN.

But NIBOR for one-month, 3 months and 6 months tenure buckets increased to 13.61 percent from 12.76 percent, 12.76 percent from 11.78 percent and 13.00 percent from 11.88 percent respectively.

Also, during the week, NITTY increased for all maturities tracked amid renewed sell pressure. Yields on the one-month, 3 months, 6 months and 12 months tenors rose to 10.87 percent from 8.74 percent, 13.32 percent from 9.13 percent, 12.21 percent from 10.26 percent and 13.85 percent from 11.93 percent respectively.