CBN to Offer N162.02bn Bills for Subscription Midweek
Ahead of N27.19 billion that is about to mature, the Central Bank of Nigeria (CBN) is set to conduct its second Treasury Bills (T-Bills) auction for the month on Wednesday. The total offer size is N162.02 billion, split across three maturities, and analysts said rates could taper further on the expectation that demand will remain healthy.
The authority will open 91-day bills worth N22.02 billion for investors’ subscription; the expected cutoff rate is projected to range between 17.84% and 17.94%. The Central Bank also planned to open N40 billion worth of 182-day to maturity for subscription at estimated cut off rate between 18.44% -18.54%.
At the long end, the auction circular showed that N100 billion worth of Nigerian Treasury bills with one year maturity will be opened for subscription at an expected cut off rate between 18.84% -19.04%.
For tomorrow’s primary market auction, the rates outlook is mixed given the slowdown in Nigeria’s headline inflation for the second consecutive month. At the last auction, spot rate on 91-day bill declined by 2 basis points to 17.98%. The spot rate for 182-day bills was flattish at 18.50% while 364-day bills was priced at 19.35%, 21 basis point reduction from prior auction.
Liquid interbank market, disinflation, reduced bond offer amount, and strong Nigerian Treasury Bills bid/cover all point to one direction at tomorrow’s auction. The rates direction is expected to be affected by sustained supply of OMO instruments at 28% effective yield by the CBN.
Investment analysts at AAG Capital Limited said the high effective yield on OMO bills makes the one year Nigerian Treasury bills a hard sell to the heavy-hitters, thereby limiting the trading liquidity of such below 19% discount. #CBN to Offer N162.02bn Bills for Subscription Midweek
