FG borrowing surges as T-bills rates peaks at 7.2%

CBN to raise N1.13tn treasury bills in Q2

FG borrowing surges as T-bills rates peaks at 7.2%, analysts predict sustained increase in rates

In a bid to attract lending from local investors, the federal government borrowing recorded its highest T-bills offering which has seen 365-Day T-bill rise to 7.20 per cent from 6.80 per cent.

This increase can be attributed the heightened inflation figures which had discouraged investors from FG instruments but with the recent increase in long-term T-bills instrument, investors have increased their stakes in federal government instruments at the expense of the equities market.

In the just concluded week, CBN sold T-bills worth N209.50 billion, to mop up the matured N138.17 billion bills, at relatively flat stop rates at the short end of the curve.
However, irrespective of the increase in 365 days T-bill, 91-Day and 182-Day bills were unchanged at 2.5 per cent and 3.5 per cent respectively.

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Analyst from Cowry Assets noted that the Central Bank of Nigeria have appeared to have changed gear amid demand pressure on the greenback.

They stated: “In tandem with the direction of rate, NITTY for 1 month, 3 months, 6 months and 12 months maturities rose to 2.93 percent from 2.85 percent, 3.65 percent from 3.25 percent, 4.76 percent from 4.53 percent and 7.49 percent from 6.87 percent respectively.”

“Meanwhile, CBN sold only N50 billion worth of bills to investors despite the N119.07 billion worth of matured OMO bills. However, NIBOR rose for all tenor buckets, Overnight rate, 1 month, 3 months and 6 months fell to 14.10% (from 12.27%), 12.58% (from 8.95%), 13.43% (from 9.65%), and 14.49% (from 10.57%) respectively.”

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They further noted that in the new week, “T-bills worth N186.36 billion will mature via the primary and secondary markets to exceed T-bills worth N155.88 billion, which will be auctioned by CBN via the primary market; viz: 91-day bills worth N1.61 billion, 182-day bills worth N5.91 billion and 364-day bills worth N148.36 billion. Cowry Research expects the stop rates of the 364-day to continue in northward direction as investors seek higher yields.”

Furthermore, Analysts from Cordos Securities noted that trading in the Treasury bills secondary market turned bearish following market participants’ reaction to the increase in the stop rate of the long-dated instrument at Wednesday’s NTB PMA.

“Consequently, the average yield expanded by 18bps to 5.6 percent. Across the market segments, the average yield expanded by 10bps and 30bps to 6.2 percent and 4.9 per cent at the OMO and NTB segments, respectively. At the bi-weekly NTB PMA, the CBN offered bills worth N138.17 billion and eventually allotted N209.50 billion – N4.94 billion of the 91-day, N11.88 billion of the 182-day and N192.68 billion of the 364-day bills – at respective stop rates of 2.50 percent which is unchanged, 3.5 percent also unchanged, and 7.2 percent previously 6.8 per cent.

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“Considering the current uncertainty created by the higher NTB PMA stop rate, we expect the result of next week’s NTB PMA to provide clarity and dictate the direction of yields. At the PMA, the CBN is set to roll over NGN161.79 billion worth of instruments,” they stated.


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