A Review of the Nigerian Energy Industry

CBN to auction N135bn treasury bills

CBN logo28 July 2014, Abuja – In line with its tight monetary stance, the Central Bank of Nigeria will on Wednesday sell N134.88bn in treasury bills.

The CBN sells treasury bills bi-monthly to manage the volume of money supply in the economy.

The maturities of the treasury bills on offer will range between three months and one year.

A breakdown shows that the bank will issue N34.88 billion in 3-month bills, N48 billion in 6-month bill and N52 billion in one-year bills.

The treasury bills market commenced last week flat but subsequently fed off the Wednesday’s bond auction.

The short end of the curve experienced sell-offs driving rates higher as institutional investors looked to position ahead of this week’s primary market auction.

Meanwhile, the Nigerian Interbank Offered Rates (NIBOR) was unchanged for the second straight week as it closed at an average of 10.50 per cent last Friday.

The interbank money market commenced the week tightly due to funding for last Wednesday’s Retail Dutch Auction System (RDAS), NNPC’s withdrawals and muted inflows.

These inched rates higher by an average 25 basis points bringing the open buy back (OBB) and overnight rates to 10.75 per cent and 11 per cent respectively.

Rates however remained unchanged on Tuesday and Wednesday as more withdrawals were made from the system for the bond auction of N109 billion during the week.

But last Thursday, huge inflows from OMO maturities worth N180 billion lifted rates average by an average of 25 basis points.

“Rates were also tugged by the local demand for the October and November maturities. In addition, FAAC allocation (N376 billion) hit the system on Friday easing liquidity in the system,” a report by Afrinvest Securities Limited stated.

It however explained that the momentum of liquidity mop up waned, as the CBN did not offer any bill during the week.

OMO and treasury bills maturities worth N44 billion and N134 billion are expected to mature this week while FAAC allocation settles in the system.

Forex market
Players at the interbank market demonstrated weaker appetite for the greenback during last week’s RDAS auction as the central bank auctioned a total of $650 million at the regulated bi-weekly forex market.

However, only a total of $584.5 million was successfully sold. This was six per cent lower week-on-week.The marginal rate during both auctions remained muted at N155.73 to a dollar.

The naira strengthened by  23 basis points week-on week as a result of the moderate demand for the greenback by importers. This translated to a 38 kobo appreciation which supported the local unit to close the week at N161.98 to a dollar at the interbank.

“The year-to-date loss on the naira waned to 1.2 per cent, following three weeks of sustained gain in the local currency which could be ascribed to increasing oil price in the world market,” Afrinvest Securities stated.

On the other hand, the BDC segment of the forex market stabilised during the week. The central bank recently extended the deadline for the implementation of the new capital requirement for the BDCs to July 31.

Bond market
Trading at the bond market on the first two days were cautions as investors side-lined the market in anticipation of the scheduled reopening and new issuance. The 2016, 2024 and 2034 bond auctions were allotted at a marginal rate of 11 per cent, 12.19 per cent and 12.14 per cent respectively.

Analysts anticipate the current level of liquidity in the system would sustain the pressure on yields this week.

– This Day

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