Nigeria govt to raise N952bn through Treasury Bills sales by end 2016

Cost of operating TSA is not sustainable but….Buhari’s minister
Kemi Adeosun, Nigeria's Minister of Finance
United Bank for Africa

The federal government of Nigeria has concluded all plans to raise a total of N952.04 billion ($3.02 billion) through issuance of new Treasury Bills (TB) between September 15 to December 1this year, the latest issuance calendar of the Central Bank of Nigeria (CBN) showed yesterday.

The apex bank said it would sell 264.47 billion naira worth of three-month bills, 204.88 billion of six-month bills and 482.69 billion of one-year bills.

Barelya week,Nigeria’s government had raised total amount of 212.85 billion naira ($654.92 million) in an auction of treasury bills, with yields little changed from previous sales, data from the Debt Management Office has shown.

The debt office raised 45.85 billion naira of three-month paper at 14.38 percent, down from 14.99 percent in mid-August; 62 billion naira of six-month bills at 17.50 percent, up from 17.48 percent, and 105 billion of one-year paper at 18.42 percent, down from 18.50 percent.

But market players said that higher subscriptions on the one-year sale suggested some offshore investors participated, adding that offshore investors traded about $270 million through the interbank forex market to fund investments in naira debt last week Monday.

“The market liquidity was sufficient to support transactions this week, the reason we have the rates at par with the central bank’s standing lending facility rate of 16 percent,” one dealer said.

It was gathered that forex traders were of the opinion that the CBN efforts to reduce the level of liquidity through the selling of treasury bills was not enough, because of repayment of about 212 billion naira in matured treasury bills last week Thursday.

However, the move to raise total N952.04 billion through treasury bills from September to beginning of December may be reaction to the suggestion by the market traders that the CBN needs to sell more treasury bills to reduce cash in the system.

It is worthy of note that the federal government issues treasury bills as part of measures to finance the government budget deficit and also to help manage liquidity in the banking system.

However, market liquidity had opened at 167.26 billion naira last Friday, a day after the central bank sold treasury bills which significantly reduced level of cash in the banking system, pushing up cost of borrowing among banks.

“The market was trading around 10 percent for overnight placement prior to the sale of treasury bills, but rose sharply to an average of 15 percent shortly after the result of the auction was announced,” one dealer said.

Meanwhile, the nation’s economic management team has said that it’s expected to borrow around 900 billion naira from the local market to bridge its budget deficit, which is estimated at 2.2 trillion naira in this year’s budget.