Rates to trend low on N110bn treasury bills auction, maturities

As Nigeria plans to auction N110 billion ($350 million) of treasury bills on May 17, there are expectations that money market rates would trade low as the impact of a treasury bills auction of N110.9 billion will softened by a scheduled maturity of the same amount.

The Central Bank of Nigeria plans to sell N32.43 billion of three-month debt, N22.82 billion of six-month bills and N55.68 billion of one-year notes, using a Dutch auction system.

Settlement according to the apex bank will be the day after.

The government issues treasury bills twice a month to finance its budget deficit, help lenders manage liquidity and control inflation. The bank has increased the frequency of treasury bill sales recently to soak up excess liquidity, a move to curb pressure on the local naira currency.

“In the coming week, the CBN will be conducting a treasury bills auction of N110.9 billion on 91-day, 182-day and 364-day instruments though the impact on liquidity is expected to be muted by a scheduled maturity of the same amount.

“We also expect debits from successful bids at the FX wholesale intervention action as well as open market operation auctions to impact on liquidity conditions and keep money market rates around current levels,” one dealer said.

Meanwhile, dealers from Afrinvest West Africa Limited, said performance in the Treasury Bills market was bearish last week as average rates trended upward on 3 of 5 trading days with minimal activities witnessed across all instruments. The week opened with average rate up 11bps from Friday’s previous close of 18.4 per cent as investors sold-off on short term instruments. By mid-week, rates moderated marginally by 1bp to18.6 per cent owing to improved interest on the shorter end of the curve before settling at 18.6 per cent on Friday, up 20bps W-o-W.