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CBN to raise N70.55bn from Treasury Bills

By on July 8, 2014

The Central Bank of Nigeria will raise N70.55bn by issuing three and six-months Treasury Bills at an auction on Wednesday.

The bank said it would raise N20.15bn in the three-month bill and N50.40bn in the six-month note, using the Dutch Auction System. The auction results are expected the next day.

The CBN had raised N134.5bn in treasury bills with tenor ranging between three-months to one year with mixed yields at its last auction in June.

It had also said it would raise N936.92bn from treasury bills in the coming three months.

Meanwhile, yields on CBN treasury bills are likely to inch down at this week’s auction, while good liquidity in Kenya’s money markets could spur demand for treasuries.

Reuters reports that higher liquidity in the money markets will boost demand for government securities thus helping to drive down yields.

“We don’t expect rates to be far off from the previous auction,” one dealer with Stanbic IBTC said.

Yields stood at 9.95 per cent for the 91-day and 10.25 per cent for the 182-day bills last week.

Traders said the two debt notes were currently trading around 10.30 per cent for the 91-day treasury bills and 10.20 per cent for the 182-day bills in the secondary market.

Meanwhile, the interbank lending rates in the country were unchanged for the second straight week on Friday at an average of 10.25 percent, supported by excess naira liquidity in the banking system, dealers said.

The cash balance held by banks at the central bank rose to a credit of N454bn at Friday’s open, compared with N433.2bn a week ago, dealers said.

The CBN paid off around N135bn worth of Open Market Operations treasury bills which had matured on Thursday, boosting liquidity.

Lending rates among banks have reached a floor, dealers said, noting that they do not expect rates to fall further even with the liquidity boost, owing to a cap on central bank’s benchmark deposit rate.

The open buy-back was unchanged at 10.25 per cent, 1.75 percentage points below the central bank’s benchmark interest rate of 12 per cent.

Overnight placement was flat at 10.25 per cent, same level the previous week.

 

[Punch]