Nigeria raises N176bn in treasury bills on lower yields

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On the back of relative improvement in system liquidity amid inflow from the N47.12 billion coupon payment on the February-2020 bond, Nigeria at an auction, yesterday raised N176 billion worth of treasury bills.

The Central Bank of Nigeria offered N6 billion of three-month paper, N30 billion of six-month bills and N140 billion of one-year notes and the bank issues treasury bills twice a month to help the government to finance its budget deficit, curb money supply growth and provide an avenue for lenders to manage liquidity.

Total demand for the notes stood at N229.9 billion as investors were demanding as high as 20 percent yields for the one-year paper, which sold for 13.7 per cent. It sold the one-year paper at 14.3 per cent in January.

The bank auctioned the three-month bill at 11.95 percent from 12.55 percent last month and the six-month note at 13.65 percent from 13.92 percent.

The government has been working to lower its borrowing costs, particularly as inflation fell for the 12th time in a row on Wednesday. The government also plans to refinance $2.5 billion worth of treasury bills from the proceeds of a planned eurobond sale this first quarter.

Analysts at Cordros Capital say they expect demand for the bills to be active at the auction on the back of relative improvement in system liquidity amid inflow from the N47.12 billion coupon payment on the February-2020 bond on Tuesday, in addition to the expectation of maturing open market operations (OMO) bills of N89.08 billion on Thursday.

Apart from the impact of liquidity position, analysts said the activities at the auction will further reflect investors’ reaction to rising expectation of monetary easing, moderating inflation, healthy participation from the offshore community, and the government’s new debt management strategy, particularly with the recent announcement of plans to refinance maturing bills using proceeds of the proposed $2.5 billion Eurobond, already approved by the National Assembly.

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