CBN to raise #129.6b in T-bill

The Central Bank of Nigeria (CBN) plans to raise N129.67 billion ($403.01 million) in short-dated treasury bills at an auction on Wednesday.

The bank said it would raise N28 billion in three-month paper, N33.49 billion in six-month bills and N68.18 billion in one-year bills. Payment for the purchases would be made on Thursday, the bank said in a public notice.

The CBN issues treasury bills to raise cash to fund the budget deficit, manage banking system liquidity and curb rising inflation.

The T-bills' maturities range between three months and a year and would be raised today, according to the CBN. T-bills are marketable short-term money market securities that serve the purpose of raising money for the government and help in monetary policy management of the CBN.

The CBN issues treasury bills to raise cash to fund the government budget deficit, help manage banking system liquidity and curb rising inflation.

The CBN had, on August 3, raised N245.18 billion ($773.44 million) worth of T-bills to settle short-term obligations. The CBN issued N45.18 billion in three-month debt, N80 billion of six-month paper and N120 billion of one year bills in a Dutch auction, 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 would 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.

The bank lifted interest rates by 200 basis points last week to 14 per cent to help fight inflation, which hit a 10-year high of 16.5 per cent in June.