Rates to moderate on expected inflow of N226.72 bn

There are indications that money market rates will record some moderations this week as Open Market Operation (OMO) maturity of N105.0 billion Treasury Bills maturity worth N55.1 billion, as well as the Debt Management Office’s (DMO) expected  repayment of N66.62 billion  on December 21, provide liquidity boost.

Thus, dealers expect to see improvements in system liquidity levels and sustained improvement in trading activities.

Although the Central Bank of Nigeria (CBN) last week stuck to the recent trend of not issuing OMO bills, “We do not rule out the possibility of OMO issuance this week given that liquidity level closed at N786.6billion in the week – the highest in recent months,” one dealer said.

Yields on Nigeria’s mid-dated treasury bills rose nearly 1 percentage point to 12 per cent on Friday, extending a three-day rally as a sell-off which started last week continued, traders said.

The Debt Management Office (DMO) repaid N131.42 billion ($429.13 million) worth of treasury bills on Thursday instead of rolling them over, thereby slightly reducing its debt and debt-servicing costs for the government.

The bills issued as one-year, but with between 160 and 220 days to maturity, rose 80 basis points on Friday as investors booked profits.

Meanwhile, Nigeria plans to sell N1.27 trillion worth of treasury bills in five auctions in the first quarter of 2018, according to the Central Bank of Nigeria’s Treasury Bills Issuance Calendar obtained by Nigerian Tribune.

Specifically, the CBN would offer N87.71 billion in the three-month paper, N244.27 billion in the six-month bill and N933.61 billion in a one-year note.

The planned treasury bills auction of N1.27 trillion in Q1 2018 represent a 38 per cent increase over the N917.144 billion the CBN issued in the fourth quarter of 2017.

The bank issues treasury bills twice a month to help the government to finance its budget deficit, curb money supply growth and provide an avenue for lenders to manage liquidity.