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CBN sells N173b T-Bills, fixed income securities’ yields rise

CBN sells N173b T-Bills, fixed income securities’ yields rise
January 06
06:58 2017

The Central Bank of Nigeria (CBN) has sold N172.85 billion ($550 million) at its first treasury bill (T-Bills) auction of the year with yields unchanged from the previous auction, held on December 21.

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, the country’s economic mainstay.

Fixed income traders said the apex bank auctioned N115.85 billion of one-year debt at a rate of 18.68 per cent, the same as the previous auction.

The traders said the CBN also sold N35 billion of 91-day paper at 14 per cent and N22 billion of six-month bills at 17.5 per cent, unchanged from the previous auction.

Subscription at the auction came to N194.12 billion, well up from N42.68 billion at the previous auction.

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 T-bills’ maturities range between three months and a year and would be raised today, according to 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.

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