CBN in another T-bills auction exercise as FG raises N243.8bn

The Central Bank of Nigeria, CBN, is set to sell N130.37 billion worth of treasury bills at an auction planned for October 4, 2017.

The apex bank will offer N28.69 billion in three-month paper, N33.49 billion in six-month bill and N68.18 billion in one-year note. Results of the auction will be announced on the same day.

The CBN 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.

The T-bills’ maturities range between three months and a year and would be raised today, according to the CBN. T-bills are marketable short-term money market securities that serve the purpose of raising money for the government and also help in monetary policy management of the CBN.

The CBN issues treasury bills to raise cash to fund the government budget deficit, help manage banking system liquidity and curb rising inflation.

The CBN had on August 3, raised N245.18 billion ($773.44 million) worth of T-bills to settle short-term obligations. The CBN issued N45.18 billion in three-month debt, N80 billion of six-month paper and N120 billion, of one year bills in a Dutch auction, traders said.

Indicative rates for the auction are 16 per cent for three-months, 18 per cent for six-months and 18.5 per cent for one-year bills. The auction’s results will be published the day after the sale.

The main investors in government securities are mainly pension funds and commercial banks which control more than 60 per cent of the market, followed by insurance funds and a few micro-finance institutions.

Yields on fixed income securities have been rising in recent months with the CBN mopping up naira liquidity to try to lure back foreign investors who sold naira assets following the plunge in the price of oil, Nigeria’s economic mainstay

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Meanwhile, the Federal Government has raised N243.78 billion from the bond exercise carried out on Wednesday, September 27, 2017, by the Debt Management Office, DMO.

The DMO had offered N135 billion for sale to investors, but it eventually raised N243.78 billion from the exercise, almost doubling it.

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Specifically, the DMO allotted N76.93 billion to the N50 billion 16.2884 percent FGN MAR 2027 notes at 15.9000 percent, while the N50 billion 16.2499 percent FGN APR 2037 paper got N131.59 billion at 15.9200 percent.

In addition, the N30 billion 14.50 percent FGN JUL 2021 notes were eventually sold at N35.26 billion at 15.9899 percent after receiving subscription of N50.28 billion from investors.

The DMO received a total of N394.85 billion subscription from investors from the N135 billion bond auctioning yesterday.