CBN to Open N700bn Treasury Bills for Subscription
As part of an effort to manage liquidity in the financial system, the Central Bank of Nigeria (CBN) will be offering N700 billion worth of Nigerian Treasury bills to investors in the primary market on Wednesday.
The authority will offer the huge amount across standard maturities: 91-day, 182-day and 364-day amidst tight liquidity in the financial system. MarketForces Africa reported that spot rate on one year treasury bills have been on decline amidst rising appetite for the naira asset.
Most analysts in the fixed incoem market are of the view that inflation figure which is expected to be released before the auction day will set the direction for spot rates pricing at the primary market auction. This week, a total of N1.29 trillion worth of treasury bills is set to mature across standard tenors, MarketForces Africa gathered.
Analysts anticipate rates to maintain their downward trend despite negative liquidity balance in the financial system. The results of the past auction suggest demand will remain strong as banks continue to ramp up investment securities amidst slowdown in loan growth.
Nigeria emphasis on managing borrowing costs, and rebased inflation data could influence the CBN to adjust rates downward. On the other hand, the higher offer size of N700 billion, which is significantly lower than the volume of maturing bills worth N1.29 trillion could prompt CBN to consider reducing rates further, analysts said.
Fixed income market analysts sampled by MarketForces Africa agreed that the auction will be significantly over subscribe, reflecting sustained demand for naira assets, though negative liqudity in the financial system provide downside risk to the auction performance.
#CBN to Open N700bn Treasury Bills for Subscription Interbank Rates Slow as Remita, FAAC Credits Boost Liquidity
