Rates to moderate as N142.436bn worth of T-bills auction offset maturities

EXPECTATIONS are high that money market rates will be moderate this week as N142.436 billion worth of Treasury-bills auction, offset maturities of the same amount.

At the Primary Market Auction (PMA), the Central Bank of Nigeria (CBN) will be auctioning N32.4 billion of the 91-day, N30.0 billion of the 182-day and N80.0 billion of the 364-day instruments to be auctioned on February 15 and payment due the day after the auction.

One dealer expects that investors will subscribe to the longer dated instruments in expectation of a medium to long term moderation in yield environment.

Another dealer however projects that money market rates will trend northward as the demand for primary market instruments expected to be auctioned by the CBN and Debt Management Office (DMO) weigh on financial system liquidity.

But,” these  will  be  fully  offset  by  treasury  bills  maturities  via  primary market,  viz: 91-day bills worth N32.436 billion, 182-day  bills worth N30 billion and 364-day bills worth N80 billion. Also, this may be moderated by inflows from FAAC allocations, which are likely to be released during the week,” the dealer noted.

The treasury bills are to fund the national budget deficit, manage banking system liquidity squeeze and curb rising inflation in the economy.

With an outlay of N7.298 trillion, the 2017 budget has overall projected fiscal deficit of N2.36 trillion (about 2.18 per cent of GDP).

The Minister of Budget and National Planning, Udoma Udoma, had said the deficit would be financed mainly by borrowings, projected at N2.32 trillion, consisting external sources (N1.067 trillion, or 46 per cent) and domestic sources N1.25 trillion.

During the consultative meeting with private sector operators on Monday, Mr Udoma said the Federal Government was targeting at least seven per cent growth in the economy by 2020, amid efforts to lift the country out of its first recession in 25 years.