CBN to Auction T-Bills Totalling N700bn, Analysts Differ on Rates
The Central Bank of Nigeria (CBN) is set to conduct its first Treasury Bills auction on Wednesday with an offer size of N700 billion across standard tenors.
Nigerian Treasury bills with a 91-day tenor totalling N100 billion will be opened for subscription on Wednesday, amid expectations of repricing of rates.
Bills with 182 days to expiration totalling N100 billion will be among the offers on the table at the primary market auction on Wednesday.
The market anticipates the authority to offer N500 billion worth of 364-day Nigerian Treasury bills for sale on Wednesday, with a slew of fixed-income analysts projecting significant bids, reflecting rising appetite for long-duration investments.
At the previous auction, the authority offered N400 billion worth of Nigerian Treasury bills for investor subscriptions. Total demand surpassed N3.062 trillion. The CBN allotted bills worth about N692 billion for 91, 182 and 364-day subscriptions.
Spot rate on 91-day bills was unchanged at 15.95% while rates on 182- and 364-day bills fell to 16.42% and 16.43% from 16.62% and 16.63% respectively.
“We align with lower auction print at tomorrow’s auction, given a moderate offer compared to previous sizing and preferred pricing by the issuer, ultimately to cut costs”, AAG Capital Limited said.
A slew of fixed-income market analysts anticipate the highest subscription level given the sizeable liquidity in the financial system. However, there is divergence around spot rate pricing following previous surprises.
Broadstreet analysts think rates will be determined by subscription levels, citing the trend from recent auction results. Meanwhile, some investment analysts think one-year bills deserve an upward repricing.
