Nigeria’s Central Bank will issue a total of N850.41 billion treasury bills in the first quarter of 2021 as the same amount will be maturing between December 2020 and February next year.
The CBN stated this in the Nigerian Treasury Bills issuance programme calendar released on its website on Thursday.
On a quarter-on-quarter basis, the amount is 7.41 percent lower than N918.45 billion offered in the fourth quarter (Q4) 2020, and 3.27 percent above the N823.43 billion issued in the corresponding quarter of 2019.
The breakdown of the T-bills programme to be issued in the first three months of 2021, which represents the amount that would mature during the same period, consists of a total of N76.82 billion for 91-day tenor, N176.86 billion for 182-day tenor and N596.73 billion for 364-day tenors.
The CBN issues Treasury Bills twice in a month to help the Federal Government fund its budget deficit, support banks in managing liquidity in the system and curb inflation.
At the money market on Thursday, investors were on the waiting and watching mood to see the offer rate for the CBN’s special bill.
The CBN on Wednesday introduced a special 90-day tenor special treasury bill with zero coupon as part of efforts to deepen the financial markets.
Ayodeji Ebo, senior economist/head, research & strategy, Greenwich Merchant Bank, said the CBN has introduced this additional liquidity management tool to boost the liquid assets available for the banks.
The Discretionary Cash Reserve Ratio debits in the past few months have mopped up significant liquidity from the banks taking the effective CRR significantly above the 27.5 percent statutory threshold.
This, Ebo said, would boost the liquidity ratios of the banks and also give them more flexibility on the use of the liquidity.
However, this will increase hugely the available investment securities in the market, hence may pressure rates downwards. Fingers are crossed on the levels the discounted instruments will be issued by the CBN as this will determine the direction of yields in the coming days.
If the securities are issued in line with the current yield, then this will not be attractive to the retail and institutional investors save for the banks and Pension Fund Assets (PFAs) with high liquidity.
A report by Greenwich Merchant Bank noted that investors’ apathy continued in the T-bills space as the yield curve closed unchanged at 0.1 percent. Away, funding rates were benign, pressured by the sturdy banking system liquidity which opened at N515.13bn, albeit 16.6 percent lower Day-on-Day. Thus, Open Buy Back and Over Night rate trended south to 0.5 percent and 0.9 percent, respectively, from 0.7 percent and 1.0 percent.
The Open Market Operation (OMO) space witnessed yield elevation by sharp profit-taking along the mid and long end of the market. Notably, the short end of the market stayed flat. Reflecting the bearish tone, yields rose 10bps to average 0.2 percent.
Ebo said the bears strengthened their hold in the Bonds market lifting yields 20bps higher to an average of 4.1 percent. Across the tickers, the intermediate section of the curve (+52bps) drove the market compared to the long end (+4bps) and the short end (+1bp).
The selling pressure was most pronounced across 26-APR-2029 (+78bps), 22-MAY2029 (+75bps), 20-NOV-2029 (+70bps) instruments. The current momentum in the market could persist until the issuance of CBN’s special bills as market players anticipate the yield level.
Nigeria’s foreign exchange market witnessed further depreciation in the value of the naira by 3.09 percent (or N15) to N470 on Thursday as against N485 on Wednesday on the black market.
At the Bureau De Change segment, naira gained against the dollar by 5.05 percent (or N25) as the market closed at N470 on Thursday from N495 on Wednesday.
Naira remained stable at N395.00 per dollar at the Investors and Exporters (I&E) forex window on Thursday. Analysts at FSDH Research said most participants maintained bids between N364.50 and N396.00 per dollar.
The daily FX turnover rose significantly by 173.33 percent to $158.42 million on Thursday from $57.97 million recorded on Wednesday, data from the FMDQ indicated.
