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FG raises N136bn in treasury bills at higher yields

By on January 9, 2016

The Federal Government on Thursday sold N136.24bn ($684.67m) in Treasury bills with maturities from three months to one year at its first auction of the year on Wednesday. The T-bills were at higher yields than previously, the Central Bank of Nigeria said.

The bank sold N55.4bn of three-month paper at four per cent, up from 3.62 per cent, at a sale on December 23, according to Reuters.

It also sold N25bn of six-month debt at 6.99 per cent against 6.19 per cent, and N55.84bn of one-year paper at 8.05 per cent compared with 7.45 per cent.

Total demand stood at N311.5bn, compared with N226.97bn last time.

In September last year, the country planned to raise N100.88bn in treasury bills with maturities between three months and one year at an auction on September 23, according to the CBN.

Then, the bank said it would issue new 91-day paper worth N31.19bn, N10.61bn in 182-day bills, and N59.08bn in one-year debt, using the Dutch Auction System.

Nigeria issue treasury bills twice-monthly to fund the government budget deficit and manage liquidity in the banking system.

The Debt Management Office had in December last year stated that the country was in a strong standing to raise funds from the bond market to finance any deficit from the 2016 budget if it is so required.

The agency stressed that the Nigerian bond market had the capacity to bridge the funding gap in the budget.

The Director-General, DMO, Dr. Abraham Nwankwo, had said the slump in crude oil prices in the international market had made a deficit budget inevitable this year, adding that the DMO was prepared to borrow on behalf of the government to fund the deficit.

Nwankwo dismissed the fear in certain quarters that the government might not be able to borrow from the bond market to finance any shortfall in the budget because of the recent delisting of Nigeria from the JPMorgan Bond Index. He added that the market was developed by domestic investors who were still around to invest in it.

 

[Punch]