Investors Position for N89bn Treasury Bills Auction

• Investors Position for N89bn Treasury Bills Auction

The Central Bank of Nigeria (CBN) will this week auction treasury bills worth N89.50 billion.

A breakdown of the debt instrument to be sold by the regulator includes 91-day bills worth N5 billion; 182-day bills worth N14 billion and 364-day bills worth N70.50 billion.

Analysts at Cowry Assets Management Limited anticipated that the stop rates of the instruments would moderate in accordance with recent trend which had seen the short term papers being highly sought for by investors especially as the Federation Account Allocation Committee (FAAC) inflows was being anticipated.

Also, maturing bills worth N215.86 billion, expected to hit the market this week, was expected to drive down interbank rates.

The CBN has maintained the pace of open market operations (OMOs) in recent times, as it held three auctions last week, for instruments worth a total sum of N645.8 billion across tenors between 91-days to 192-days at marginal rates between 11.9 per cent (on the shorter tenor instruments), to 13.48 per cent (on the longer tenor instruments). Given the overriding aim of the CBN to keep price levels moderate, analysts anticipated that OMOs would continue apace with recent trends to limit the possibility of speculative attacks on the naira, as system liquidity was expected to be buoyed by OMO maturities worth N88.4 billion.

In the secondary treasury bills market, the average yield increased significantly by 0.8 per cent to settle at 13.9 per cent, as investors sold off instruments in the week to partake in the OMO auctions given the more attractive discount rates on instruments auctioned.

Consequent on the improved system liquidity during the week, money market rates – open buy back (OBB) and overnight (OVN) rates –pared to 9.2 per cent and 10.1 per cent respectively, from 16.3 per cent and 17.4 per cent recorded in the prior week.