FG Plans To Raise N138 Billion in Treasury Bills By Interbank Rates Up
Plans To Raise N138 Billion in Treasury Bills By Interbank Rates Up. NIGERIA Plans to issue N137.97 Billion in Treasury Bills ranging from 3-month to 1-year maturities at its regular bi-monthly debt auction on June 7, the Central Bank of Nigeria has said.
A breakdown showed that the CBN would issue N32.97 Billion in 91-day paper, N45 Billion in 182-day Bills and N60 Billion in 364-day Bills on Wednesday.
Nigeria, issues Treasury Bills regularly to reduce money supply, curb inflation and help banks manage their liquidity.
The short-dated debt of Africa's top energy producer attracted higher yields across the board at the last auction on May 23 compared with the one earlier, due to concerns on rising inflation.
Interbank lending Rates climbed by around 3.84 percentage points on the average this week to 14.25 percent, compared with 10.41 percent the previous week, as the central bank aggressively mopped up liquidity to curb inflation.
The cost of borrowing among banks in Nigeria fell last week after large budget allocations from centrally held oil revenue accounts were disbursed to the three tiers of government, increasing liquidity in the market.
"Market liquidity has dropped significantly (since then) because the CBN has been aggressively mopping up funds from the system with the conduct of open market operations (OMO)," one dealer said.
Traders said the CBN mopped-up around N200 Billion using Treasury Bills for OMO, creating cash shortage and rate spike.
The market opened with a cash balance of about N92 Billion on Friday, compared with N387 Billion balance last Friday.
The secured Open Buy Back (OBB) jumped to 14 percent, from 10.25 percent last week, 200 basis points above the central bank's 12 percent benchmark rate, and 4 percentage points above the Standing Deposit Facility (SDF) rate.
Overnight placement also climbed to 14.25 percent, from 10.5 percent, while call money rose to 14.50 percent, compared with 10.5 percent last week.
"We see the overnight rate climbing as high as 15 percent next week as the CBN continues with its aggressive mopping up exercise, coupled with funding for foreign exchange and Treasury Bills sales at the primary auction," another trader said.
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