CBN to raise N245b in T-bills at higher yields

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CBN to raise N245b in T-bills at higher yields

CBN to raise N245b in T-bills at higher yields
August 03
07:25 2016

The Central Bank of Nigeria (CBN) is planning to raise N245.18 billion ($773.44 million) worth of Treasury bills (T-bills) to settle short-term obligations.

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 plans to issue 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.

The bank lifted interest rates by 200 basis points last week to 14 per cent to help fight inflation, which hit a 10-year high of 16.5 per cent in June.

Also, the naira yesterday fell further in the parallel market to N384 to dollar from N382 on Monday as dollar scarcity continues to worsen.

However, in the official market, naira closed at N310.50 against the dollar, firmer than previous close of 315.50, Thomson Reuters data showed. The local currency traded $23 million at 280.50 just after the interbank market opened at N316.50.

One trader attributed the N280.50 rate to a dollar resale on the spot market of outright currency forwards sold by the CBN.

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