Market Alert: CBN to Auction N700bn in Nigerian T-Bills Midweek
The Central Bank of Nigeria (CBN) is scheduled to hold its first Treasury bills auction for September on Wednesday, with N700 billion on offer.
According to the reviewed auction circular, the Debt Management Office (DMO) will offer N700.00 billion in T-Bills across standard tenors: 91, 182, and 364 days on behalf of the CBN midweek.
The market expects N100.00 billion in 91-day bills to be offered for subscription, and N100.00 billion in 182-day bills to be auctioned. For one-year treasury bills, the CBN has indicated plans to raise N500.00 billion from the market.
The anticipated excess subscription would be driven by demand for 364-day Nigerian Treasury bills, investment firms said, noting that aggregate subscription would be influenced by the level of excess liquidity in the financial system.
Since the previous auction, the average yield has declined amid an expanding appetite for fixed-interest securities. At the previous auction in August, the Central Bank kept the spot rate for 91-day bills at 16.30% and 182-day paper was priced at 16.50%.
However, the authority reduced the spot rate on 364-day bills to 17.15%, a decision supported by excessive demand for one-year paper at the auction.
Activity in the treasury bills market was slightly bullish, with the average yield remaining flat at 18.85%, amid notable demand for the 12-AUG (-26 bps) and 26-AUG (-4 bps) papers.
With the buying signal, fixed-income market analysts projected that subscription would surpass the offer size severalfold. Spot rates are expected to decline given the lower offer at the OMO auctions.
