CBN to Offer N400bn Treasury Bills for Subscriptions

Central Bank of Nigeria (CBN) will open N400 billion worth of Nigerian Treasury bills (NTB) for investors’ subscriptions at the primary market auction scheduled for next week. The auction, which is expected to be led by the Debt Management Office (DMO) on behalf of the monetary authority, will see offers across standard maturities: 91-day, 182-day, and 364-day bills. The authority was unavoidably absent in the just concluded week with zero offers, as analysts said DMO will more likely increase its borrowing plan to cater to the Nigerian government’s revenue shortfall following a shift in the oil market and global trades.
Analysts, however, noted that the Treasury bills offer will be met with maturities worth N369.78 billion, creating a net issuance gap of approximately N30.22 billion. Given the prevailing liquidity conditions and anticipated investor interest, next week’s auction is likely to attract significant participation, Cowry Asset Management Limited told investors in an update. Analysts also said the auction will provide critical signals for the near-term direction of short-term interest rates.
Meanwhile, the Treasury bills secondary market traded with mixed sentiments, as analysts at Cordros Capital Limited noted that higher inflation numbers in March seemed to dampen hopes for a dovish monetary policy in the near term.
Nonetheless, market activities reflected renewed buy-interest from offshore investors, with onshore investors tilting toward a more cautious approach. Across the market segments, the average yield declined by 15 bps and 107 bps to 20.9% and 28.2% in the NTB and OMO bills segments, respectively. Fixed income market analysts anticipate an improvement in the demand for bills, causing yields to taper slightly.  At the auction, analysts also expect rates to taper, albeit slightly.