CBN to Auction Nigerian Treasury Bills Totalling N750bn
The Central Bank of Nigeria (CBN) is scheduled to auction N750 billion in local treasury bills across three standard tenors on Wednesday. The Apex Bank will raise the amount across 91-, 182-, and 364-day Treasury bills amid sustained investor demand for duration.
At the short end, 91-day treasury bills totalling N100 billion will be auctioned on Wednesday. The authority will put N150 billion worth of 182-day bills for investor subscription. Reflecting surging demand, the CBN will offer N500 billion for the longest tenor – 364-day bills.
Amidst persistent spot rate cuts, analysts said the midweek auction is expected to be oversubscribed due to sustained appetite for the naira asset, coupled with excess liquidity levels in the financial system.
The financial system’s liquidity closed at N3.84 trillion last week, amid sustained logement at the Standing Deposit Facility by Nigerian banks. At the same time, the market anticipates about N1.6 trillion inflows from maturing treasury bills, OMO and bond coupons to boost system liquidity.
Fixed-income market analysts anticipate mixed expectations for spot rates on Treasury bill papers. The CBN has been reducing its premium on the short-term instruments due to strong demand.
With a surge in headline inflation, real return on investment has reduced. High interest rate (26.5%) has continued to chase lower inflation (15.38%), leaving the real interest rate at 11.12%
At the previous auction, the CBN reduced spot rates on 182-day and 364-day bills but kept 91-day bills unchanged.
The spot rate was slashed to 16.19% from 16.42%, marking the second consecutive downward adjustment. The spot rate for 1-Year Nigerian Treasury bill dropped to 16.199%, from 16.43% at the previous auction. Naira Sees 1.13% Weekly Gain on FX Liquidity, Interventions
