Rates to moderate as CBN refinances T-bills worth N184.39 bn

THERE are expectations that stop rates will moderate as a result of a likely increase in demand amid an expected boost in financial system liquidity following the Central Bank of Nigeria’s plan to refinance Treasury Bills maturities.

In the new week, dealers expect the CBN to refinance T-bills worth N184.39 billion which will mature via the primary market, viz: 90-day bills worth N2.87 billion, 182-day bills worth N20.00 billion and 364-day bills worth N161.52 billion.

Meanwhile, the Central Bank of Nigeria said it will sell N722 billion worth of Treasury Bills (TBs) in the third quarter of 2021 (Q3’21).

The apex bank disclosed this in its Nigeria Treasury Bills Issue Programme for Q3’21 released weekend.

TBs are short term debt instruments used by CBN to borrow money from the public on behalf of the federal government. The apex bank also uses TBs to control money supply in the economy.

The apex bank said that the TBs would be issued in tranches with the first tranche rolled out on June 3, 2021, while the last tranche is scheduled for August 28, 2021.

During the period, CBN will issue TBs worth N41.35 billion on 91 days tenor, N151.13 billion on 182 days and N529.68 billion on 364 days.

A breakdown of the programme revealed that in June, CBN plans to sell N106.1 billion worth of TBs, comprising N7.26 billion worth of 91 days bills, N9.52 billion worth of 182 days bills, and N89.32 billion worth of 364 days bills.

In July, CBN targets the sale of N407.34 billion worth of TBs, comprising N22.53 billion worth of 91 days bills, N92.84 billion worth of 182 bills and N291.97 billion worth of 364 days bills.

In August, CBN plans to sell N208.68 billion worth of TBs comprising N11.55 billion worth of 91 days bills, N48.76 billion worth of 182 bills and N148.37 billion worth of 364 days bills.

In the same vein, as the earlier rise in Treasury bills rates appears to be reversing and as CBN explores other avenues to stabilise foreign exchange rates, dealers from Cowry Assets Management Limited said the new development will have a positive effect on the real sector.

Given the declining trend in the inflation rate, the southward movement in interest rates may, however, be slow as inflation still poses a threat amid worsening insecurity.

According to the assets managers, as the direction of yields takes a bearish turn, and as corporates prepare their books for interim-dividend payment, “we expect investors’ participation in the stock market to improve in the third quarter of the year.”