CBN’s T-Bill auction tomorrow to further reduce system liquidity
The Central Bank of Nigeria (CBN) auction of Treasury Bills (T-Bill) tomorrow would further mop up liquidity, as this may further weaken expected new inroads into the equities market.
Some of the last T-bills auctioned by the CBN in 2016 are on two respective instruments on 12/14/2016 and 12/21/2016, representing 91 days and 182-day instruments respectively.
The 12/14/2016 instruments are of 91 days and 182 days, while the 12/21/2016 instruments also consist of the same tenors, 3/23/2017,6/22/2017, 3/16/2017 and 6/15/2017 maturity dates respectively.
For the 12.21.2016 T-bills, N13176.98 and N26557.73 were raised, with subscription rates of 13,320.48 and 29,368.91 respectively.
Meanwhile, money market rates trended southward across all tenors at the close of trading in 2016. The 1 month, 3 month, and 6-month NIBOR rates contracted by 12 bps, 78bps, and 43bps to settle at 17%,18 per cent and 22 per cent levels respectively.
However, as CBN conducts T-bill auction tomorrow, experts predict the auction would further lead to a decline in system liquidity, and consequently, put upward pressure on rates.
The bond market was bullish as at the close of 2016 financial year on December 30th as increased demand compressed yields across all tenors, with the exceptions of MAR 2024 and JUN 2019 debt instruments.
While the yields on both the 5yr, and 10yr benchmark bonds thinned by 6bps and 5bps to 15.72 per cent and 16.08 per cent respectively, yield on the 7yr benchmark bond closed the year with increased by 5bps to 15.69 per cent.
Experts, however, expect debt instrument activity in subsequent trading session to be influenced by liquidity levels which however targets to generate higher yields.
