CBN to roll over maturing N152.20bn treasury-bills this week

The Central Bank of Nigeria (CBN) will roll over maturing Treasury-bills worth N152.20 billion via the primary market this week.

The bills are through : 91-day bills worth N1.10 billion, 182-day bills worth N0.92 billion, and 364-day bills worth N152.20 billion as well as N10 billion in Open Market Operation (OMO) maturities to keep system liquidity afloat.

Hence, dealers expect the stop rates of the issuances to rise amid tightening liquidity conditions.

In the same way, the Federal Government of Nigeria (FGN), through the Debt Management Office (DMO), will be conducting a bond auction today.

The total amount on offer according to dealers is expected to be between N320 billion and N400 billion from four issues. The instruments include four re-opening issues (APR 2029, JUN 2033, JUN 2038, and JUN 2053).

Further breakdown show that the issues are: 14.55 percent FGN APR 2029 N80billion – N100billion, 14.70 percent FGN JUN 2033 N80 billion – N100billion, 15.45 percent FGN JUN 2038 N80 billion – N100 billion and 15.70 percent FGN JUN 2053 NGN80 billion – NGN100 billion

On Current Yield Analysis the Nigerian fixed-income market dynamics have continually been influenced by the same factor: system liquidity.

At the Primary Market Auction (PMA) held in August, the demand for treasury instruments weakened, with the total subscription declining by 66.93 percent month on month (MoM) to N312.56 billion. Analysts attribute the lower subscription level to tighter interbank liquidity during the period (NGN298.28 billion vs. NGN440.52 billion at the previous auction).

As a result, the amount raised by the Debt Management Office decreased by 65.32 percent MoM to NGN227.76 billion (vs NGN656.74 billion at the previous auction). Consequently, the bid-to-cover ratio moderated to 1.37x vs. 1.44x at the July PMA.

Further to the reduced demand, the marginal rates on the April 2029, JUN 2033, June 2038, June 2053 increased by 135 basis points (bps), 140bps, 110bps and 155bps to 13.85 percent, 15.00 percent, 15.20 percent and 15.85 percent, respectively.

“In the coming auction, we do not expect a different play in the market. We believe that the lower interbank system liquidity (NGN165.09 billion) relative to the amount the government has offered will drive marginal rates upward. This expectation is further supported by the government’s need to raise funds from the domestic debt market and investors’ demand for higher rates. Thus, we expect rates to increase in the coming auctions,” market watchers from Proshare Research submitted.

 

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