T-Bills Rates to Rise as CBN Intensifies Liquidity mop up

By Dipo Olowookere

The Central Bank of Nigeria (CBN) is expected to sell treasury bills amounting to N49.60 billion on Wednesday via the primary market.

The apex bank will auction to traders 91-day bills worth N4.96 billion, 182-day bills worth N24.80 billion and 364-day bills worth N19.84 billion.

This exercise is expected to partly offset the maturing treasury bills worth 192.01 billion.

According to analysts at Cowry Asset, “We expect their stop rates to rise while also expecting the CBN to aggressively mop up via OMO sales to make yields attractive to portoflio investors and to soak up excess liquidity from FAAC injections.

“Financial system liquidity strain is therefore expected with resultant rise in interbank rates.”

Last week, the CBN sold T- bills worth N113.31 billion via Open Market Operations (OMO). The outflows were more than offset by N266.95 billion in matured T-bills.

Also, the Standing Deposit Facility (SDF) w-o-w rose by 131.50% to N194.32 billion while the Standing lending Facility (SLF) fell by 64.13 to N307.84 billion–indicative of improved liquidity.

Consequently, NIBOR fell for most tenor buckets amid sustained financial system liquidity ease: NIBOR for 1 month, 3 months and 6 months tenor buckets fell w-o-w to 13.48% (from 13.62%), 14.59% (from 15.31%) and 15.70% from (16.99%). respectively.

However, NIBOR for overnight tenor bucket rose to 31.88% from 8.87%.

Elsewhere, NITTY across maturities moved in different directions: yields on the 1 month and 12 months maturities fell to 11.69% (from 12.21%) and 13.29% (from 13.34%) respectively; however, yields on the 3 months and 6 months maturities rose to 12.84% (from 12.39%) and 12.97% (from 12.69%) respectively.