Rush for T-Bills to Weaken Rates at Wednesday’s PMA

PMA treasury bills

By Dipo Olowookere

The renewed huge demand for treasury bills is expected to cause a marginal decline in stop rates of the government debt instrument at the primary market this week.

On Wednesday, the Central Bank of Nigeria (CBN), will on behalf of the Debt Management Office (DMO) and the federal government auction T-bills worth N125 billion to investors.

These bills would be offered in the usual three maturities; 91-day bill worth N4.38 billion, 182-day bill worth N12.92 billion and 364-day bill worth N107.94 billion.

With the barring of individuals, local firms and non-bank financial institutions from participating in open market operations (OMO) auctions of the apex bank, there would be rush for T-bills, which are still open to them.

As a result of this, the central bank is expected to lower the rates during the midweek exercise like in the past primary auctions.

Last week, the CBN sold OMO bills worth N232.45 billion to mop up matured bills worth N351.67 billion. Despite the net inflows, the financial system liquidity was strained, resulting in increase of all NIBOR tenor buckets: NIBOR for overnight funds, 1 month, 3 months and 6 months tenure buckets revved to 4.94 percent from 3.75 percent, 13.25 percent from 12.09 percent, 13.95 percent from 12.51 percent and 14.23 percent from 13.03 percent respectively.

Elsewhere, NITTY rose across maturities tracked amid renewed sell pressure, with yields on 1 month, 3 months, 6 months and 12 months maturity increasing to 12.17 percent from 11.37 percent, 13.12 percent from 11.68 percent, 13.22 percent from 12.13 percent and 14.87 percent from 14.32 percent respectively.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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