The Central Bank of Nigeria (CBN) plans to sell N1.24trillion ($4.1 billion) worth of treasury bills (T-bills) from June 15 to August 31, the regulator’s debt calendar for the third quarter has shown.
The Bank aims to auction N226.64billion in 91-day bills, N311.32billion in 182-day and N698.64 billion in 364-day debt.
The Apex Bank sells treasury bills twice a month to help fund the Government’s budget deficit and support commercial banks in managing liquidity.
Nigeria, grappling with its first recession in 25 years after a slide in global oil prices and due to the impact of attacks on energy facilities in the Niger Delta, has set out a budget plan worth N7.44 trillion for this year.
Nigeria expects to face a budget deficit of about N2.21 trillion for the year as it tries to wriggle its way out of recession. It expects to raise money to cover more than half the deficit through domestic borrowing.
The bills’ maturities range between three months and a year and would be raised today, according to the CBN. They are marketable short-term Money Market securities that serve the purpose of raising money for the Government and also help in monetary policy management of the CBN.
The CBN issues treasury bills to raise cash to fund the government budget deficit, helps manage banking system liquidity and curbs rising inflation.
The CBN on August 3 last year, raised N245.18billion ($773.44 million) worth of T-bills to settle short-term obligations. It also issued N45.18billion in three-month debt, N80billion of six-month paper and N120billion of one year bills in a Dutch auction, Treasury Bills traders said.
Indicative rates for the auction are 16 per cent for three-months, 18 per cent for six-months and 18.5 per cent for one-year bills. The auction’s results will be published the day after the sale.
The main investors in Government securities are mainly pension funds and commercial banks, which control more than 60 per cent of the market, followed by insurance funds and a few micro-finance institutions.
Yields on fixed income securities have been rising in recent months with the CBN mopping up naira liquidity to try to lure back foreign investors, who sold Naira assets following the plunge in the price of oil, Nigeria’s economic mainstay.