Rollover of N138.2bn worth of T-bills maturity to keep rates unchanged

The interbank money market rates are expected to hover around last week’s levels as the Central Bank of Nigeria’s (CBNs) auctions of treasury bills worth N138.173 billion will be largely offset by maturing treasury bills of similar maturities and amounts.

In the just concluded week, dealers said interbank lending rates increased for all tenor buckets amid liquidity squeeze.  This was in spite of matured 301-day bills worth N23.684 billion.

Consequently, Nigeria Interbank Offered Rate (NIBOR) for overnight funds, 1 month, 3 months and 6 months increased  week –on- week (w-o-w)to 70.17 per cent  (from 16.54%), 19.29% (from 17.65%),20.07 per cent  (from 18.66%)and 22.14 per cent (from 20.36%).

Nigeria plans to sell N138.16 billion ($454.47 million) in short-dated treasury bills at an auction next Wednesday, the central bank said last week. In a public notice, the bank said it would raise N36.78 billion in three-month papers, N35 billion in six-month bills and N66.38 billion in one-year bills. Payment for the purchases would be made on Thursday.

According to dealers at Cowry Assets Management Limited, “this week, we expect most interbank rates to hover around current levels as CBN auctions treasury bills worth N138.173 billion via primary market, viz: 91-day bills worth N36.787 billion, 182-day bills worth N35 billion, and 364-day bills worth N66.386 billion. The outflows will however be largely offset by maturing treasury bills of similar maturities and amounts.”

Another dealer, Afrinvest West Africa Limited expects that in the week ahead, money market rates would moderate “as T-bills maturity worth N138.2bn is expected to hit the system next Thursday. This may however be offset by a rollover of the same amount.”

Nigeria issues treasury bills to raise cash to fund the budget deficit, manage banking system liquidity and curb rising inflation.

However, Nigerian Interbank Treasury Bills True Yields (NITTY) last week, mellowed across most of the maturities amid bargain hunting – yields on 1 month, 3 months and 6 months moderated to 15.49 per cent  (from 16.78%),15.87 per cent (from 17.16%) and 18.35 per cent (from 19.51%); however, yields on 12 months rose w-o-w to 22.67 per cent (from 22.21%).