The Central Bank of Nigeria plans to sell N123billion worth of Treasury bills to mop up liquidity even as the rates in the secondary market in the last one week have remained relatively stable from previous weeks.
Analysts at Capital Bancorp noted that due to current market conditions, rates at the primary auction may close around what was in the secondary market.
Data obtained from the CBN website showed that it will auction N91 days bill at 13.5 per cent worth N45.18billion, N182 days bill at 16.8 per cent worth CBN to sell N123bn T-bills tomorrow N23.4billion and N365 days bill at 17.5 per cent worth N54.4billion.
The auction will be bided through the Primary Dealer and Market Maker. According to Capital Bancorp, the pooling of bids is necessitated as a result of challenges encountered by the PDMMs in processing a single client’s Treasury bill bid from start to finish on the CBN platform.
“Therefore, this approach is being adopted to improve efficiency and serve you better. CBP however does not commit that the bid rates proposed
above will be successful. Notwithstanding, we would continue to seek alternative investment opportunities to meet your investment needs,” the firm said.
T-bills are marketable short-term money market securities that serve the purpose of raising money for the government and also help in monetary policy management of the CBN.
The CBN had on August 3, raised N245.18 billion ($773.44 million) worth of T-bills to settle short-term obligations. The CBN issued N45.18 billion in three-month debt, N80 billion of sixmonth paper and N120 billion of one year bills in a Dutch auction.
The main investors in government securities are mainly pension funds and commercial banks which control more than 60 per cent of the market, followed by insurance funds and a few micro-finance institutions.
Yields on fixed income securities have been rising in recent months with the CBN mopping up naira liquidity to try to lure back foreign investors who sold naira assets following the plunge in the price of oil, Nigeria’s economic mainstay.
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