CBN to Open Nigerian Treasury Bills Worth N230bn for Subscription
The Central Bank of Nigeria (CBN) has been scheduled to open Nigerian Treasury bills worth N230 billion for investors’ subscriptions at the primary market auction on Wednesday. On behalf of the monetary authority, the Debt Management Office (DMO) will offer treasury bills across standard tenors—91-day, 182-day, and one-year papers for subscriptions.
The authority has been slashing spot rates as key macro indicators improved in addition to sufficient liquidity levels in the financial system. Some traders in local banks told MarketForces Africa that they expect spot rates on naira assets to decline over sustained disinflation.
“Spot rates across tenors could taper on Wednesday—thanks to disinflation, liquidity, and investors’ appetite for the local bills,” analysts said.The real interest rate (now 5.6%) has remained in positive territory since the start of the year, sustaining an environment of positive real returns for investors except in short-term government securities whose yields have trended down below the inflation rate recently.
Last week, the Treasury bills secondary market traded in a lull with a bearish undertone as the average yield across all instruments expanded due to sell-offs.Trading activities in the secondary market showed sentiment turned mixed as liquidity shifted into negative territory, triggering mild sell-offs across the curve.
However, sentiment improved toward the close of the week following the release of inflation data, which printed at 21.88%, spurring some buying interest. Despite the late recovery, the average benchmark yield still climbed.
Analysts said investors will trade cautiously as concentration is likely to shift towards the auction. Across the market segments, the weekly average yield expanded by 4 bps to 18.0% in the NTB segment, while it declined by 2 bps to 24.6% in the OMO bills segment, Cordros Capital Limited told investors in a note.
With system liquidity expected to improve in the new week due to inflows from maturing OMO and T-bills, demand for Treasury bills is likely to resurface, exerting downward pressure on yields, analysts said.
The scheduled auction is targeted at rolling over N230.00 billion in maturities, and analysts said they anticipate a moderate tapering of stop rates. #CBN to Open Nigerian Treasury Bills Worth N230bn for Subscription CBN Sells $166m to Banks, FX Forward Contracts Depreciate
