WeekAheadTreasuryBills: CBN seen settle T-bills as interbank rates rise

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In the just concluded week, CBN auctioned Treasury Bills worth N33.84 billion via the Primary market. In line with our expectation, stop rates for 182-day and 364-day bills moderated to 12.30% (from 12.49%) and 12.49% (from 12.77%) respectively amid investors’ high demand for short term fixed income securities. 182-day and 364-day T-bills were over subscribed by 202.25% and 875.41% respectively. However, stop rate for 90-day bills was flattish at 10.00%. The total outflows worth N33.84 billion partly offset the total matured bills worth N140.95 billion, hence, the financial system was awash with liquidity ease. Consequently, NIBOR fell for most tenure buckets: NIBOR for overnight funds rate, 3 months and 6 months tenure buckets moderated to 5.07% (from 9.17%), 12.19% (from 12.72%) and 14.09% (from 14.36%) respectively; however, NIBOR for 1 month rose to 12.13% (from 11.83%). Meanwhile, NITTY fell for most maturities tracked as rates fall in the primary market – yields on 3 months, 6 months and 12 months contracted to 10.60% (from 11.51%), 12.49% (from 13.31%) and 13.71% (from 14.16%) respectively; however, yields on 1 month maturity rose to 11.13% (from 10.25%). In the new week, CBN will settle T-bills worth N106.92 billion, however, we expect interbank interest rates to rise on anticipated strain on financial system liquidity on the back of expected debt auctions worth N100 billion.

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