FG to issue N70.6bn Treasury bills

by Oyetunji Abioye with agency report

The Central Bank of Nigeria will on Wednesday issue N70.64bn worth of Treasury bills with maturities of three and six months.

The CBN said it would issue N40.64bn of the three-month paper and N30bn of the six-month debt.

The result of the auction is expected on Thursday.

Yields on treasuries are expected to go up at the Wednesday auction while those of Kenyan debt could remain flat, Reuters reported.

Yields on Nigerian Treasury bills are expected to head higher at the auction in tandem with a rise in yields on the secondary market.

“We expect to see yields up at the auction because of tight liquidity which should reduce demand for the short-dated debt notes,” one dealer said.

Bond yields had climbed at last week’s auction on the back of lower demand among investors.

The CBN sold N100bn worth of bonds with maturities ranging between three and 20 years at the auction held last Wednesday.

However, the yields on Kenyan Treasury bills are expected to be stable at this week’s auction mainly due to a liquidity squeeze in the money markets and the central bank’s desire to maintain stability in rates.

The central bank will sell Treasury bills of all maturities for a total of 12 billion shillings ($135m) and it will also seek to raise another 15 billion shillings through a joint sale of a five-year and 30-year Treasury bonds.

“I expect the Treasury bills to remain fairly flat next week as liquidity largely remains unchanged and the central bank endeavours to maintain rates stability,” a fixed income trader at Kestrel Capital, Mr. Alex Muiruri, said.

Overnight borrowing rates have remained elevated in the last three weeks due to delays in the government releasing funds for expenditure by departments and local authorities.

“Banks are not going for the (debt) auctions since they don’t have the cash,” a fixed-income trader at Commercial Bank of Africa, Mr. John Njenga, said.

Njenga said the yield on the five-year bond was likely to come in at 11.2 per cent, barely moved from 11.3 per cent when the central bank last sold the same bond.

  

@punchng.com