Stories by COMFORT EKELEME
The Central Bank of Nigeria (CBN) said it has concluded plans to sell treasury bills of N1.73 trillion in the second quarter of 2016 financial year.
This was contained in CBN’s Nigeria Treasury Bills issue program released recently,
Treasury bills (TBs) are short term (less than one year) debt instruments used by the CBN to borrow from the public on behalf of the federal government. The CBN also uses TBs to control money supply in the economy.
The TB issue program commenced March 17, and would end June 2nd 2016. According to the program, during the period, the apex bank would issue N303.78 billion worth of 91 days Treasury Bills , N169.99 billion worth of 182 days Treasury Bills, and N599.63 billion worth of 364 days Treasury Bills. These however represent the amount of Treasury Bills that would mature for payment during the period.
A breakdown of the program revealed that in March, the apex bank plans to sell N261.62 billion worth of Treasury bills, comprising N68.12 billion worth of 91 days bills, N37.23 billion worth of 182 days bills and N156.27 billion worth of 364 bills.
In April, the apex bank plans to sell N386.41 billion worth of Treasury Bills, comprising N92.19 billion worth of 91 days bills, N68.49 billion worth of 182 days bills, and N225.73 billion worth of 364 days bills.
From May 5 to June 2nd, the CBN plans to sell 405.4 billion worth of Treasury Bills comprising N123.47 billion worth of 91 days bills, N64.25 billion worth of 182 bills and N217.68 billion worth of 384 days bills.
Meanwhile the amount of idle cash (excess liquidity) in the interbank money market, where bank lend money to each other, recently fell by 50 per cent to N222.46 billion from N448.47 billion.
This prompted cost of funds to rise with interest rate on short term lending (Overnight and Secured) rising to 5.0 per cent from 3.0 per cent in the previous week.
Commenting on this development, Cowry Asset Management Plc stated in its weekly financial market review and outlook, “In the just concluded week, Nigerian Offered Interbank Rates increased for all tenor buckets amid strain in financial system liquidity. Central Bank of Nigeria sold N160.66 billion in 213- day treasury bills via Open Market Operations (OMO).
“Also, standing deposit facility (SDF) rates decreased week-on-week (w-o-w) by 47.90 percent to N325.67 billion while a standing lending facility (SLF) of N3.76 billion suggested that banks resorted to the lender of last resort in the review week as against zero SLF booked in the preceding week.
“The overnight funds rate, NIBOR for 1 month, 3 months and 6 months increased to 5.31 percent (from 3.29 31 percent), 7.7831 percent from 7.41 31 percent), 9.0831 percent (from 8.93 31 percent) and 10.97 31 percent (from 10.57 31 percent) respectively. This week we expect increase in interbank lending rates on anticipated financial system outflows via investment in FGN local currency bonds.”
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