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Friday, June 9, 2023

CBN to Roll Over N107bn of Maturing Treasury Bills in Primary Auction

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The Central Bank of Nigeria (CBN) is scheduled to roll over maturing Treasury-Bills worth N107.1bn through a Primary Market Auction (PMA) auction on Wednesday.

The Nigerian Treasury Bills secondary market last week traded with mixed sentiments largely driven by depressed liquidity levels.

At the start of the week, system liquidity opened negative at – N95.2bn following the previous week’s cash reserve ratio (CRR) debit by the CBN. This triggered mild selloffs as well as increased borrowings from the CBN’s standing lending facility which further worsened system liquidity (-N273.6bn) on Wednesday.

However, sentiments slightly improved on Thursday as combined inflows from Open Market Operations (OMO) maturities worth N92.5bn and a late CRR refund (c. N300.0bn) ushered in trickles of demand on the short- term bills.

Overall, average yield across the yield curve ticked higher by 2 basis points for the week to settle at 2.1 percent with system liquidity closing at N128.3bn long on Friday.

“We also expect an improvement in demand due to inflows from both maturing OMO instruments (N146.9bn) and bond coupon payments (N105.0bn). Notwithstanding, we expect investors to trade cautiously in anticipation of the PMA. Additionally, the CBN may likely conduct an OMO auction to keep rates and system liquidity in check,” analysts at Afrinvest said in a note to investors.

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