Niyi Olaoye
Dealers within the Nigeria financial market are of high expectations that Treasury Bills (T-Bills) worth N196.99 billion to be traded on Thursday will boost financial system liquidity and soften interbank rates.
According to one of the dealers, the instruments are 91-day bills worth N35.10 billion and 149-day bills worth N161.89 billion.
“We expect the inflows to boost financial system liquidity and thereby soften interbank rates,” said dealers from Cowry Assets Management Limited.
In the same vein, the Debt Management Office (DMO) is scheduled to auction N105.0 billion worth of bonds at the monthly bonds primary market auction.
The amount on offer according to the debt office is N15 billion of FEB 2020, N40 billion of JAN 2026 and N50billion of MAR 2036 bonds. “We expect these bonds to clear at stop rates of 13.7 per cent, 13.9 per cent and 14.0 per cent respectively. We believe the bonds market performance in the week ahead will be majorly driven by the auction as investors free up liquidity ahead of the auction even as unsuccessful bids are redirected into the secondary market,” the dealers acknowledged.
Traders said the CBN failed to sell treasury bills at its open market operation (OMO) window twice in the week because commercial lenders were asking for higher returns than the bank was willing to offer.
The central bank however, sold 206-day bills worth N93.18 billion ($468.24 million) on Monday, and also retired N129.61 billion of matured OMO bills, leaving the system with more cash.
“We expect rates to trade lower next week if the promise of the government to release capital project funding next week is anything to go by,” one dealer concluded.
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