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The Central Bank of Nigeria (CBN) said it would issue short-dated treasury bills on June 18 to raise N168.3 billion ($1.03 billion), part of a debt issuance programme it announced last week.
The issuance of these bills came hours after the interbank lending rates climbed to an average of 10.87 per cent last week, from 10.5 per cent penultimate week, after payment for bond purchases sucked liquidity out of the banking system. The bank according Reuters news, plans to raise N33.26billion in three-month bills, N65.02 billion in sixmonth, and N70 billion of one-year notes, using a reverse Dutch auction system.
The Federal Government intends to raise N936.9 billion ($5.76 billion) through treasury bills over the next three months, according to a debt issuance calendar published by the bank last Tuesday. It issued N85.17 billion ($522.8million) in 3-year and 10- year bonds, putting pressure on available cash deposits.
The cash balance that lenders hold at the apex bank fell to a surplus of N349 billion last Friday, compared with N535 billion a fortnight earlier. “There was a cash squeeze today (last Friday) due to funding for bond purchases,” one dealer said.
The open buy-back (OBB) rose to 10.75 per cent, compared with 10.25 per cent and 1.25 percentage points below the banking watchdog’s benchmark rate of 12 per cent. Overnight placement rose to 11 per cent last week, from 10.50 per cent penultimate week. Dealers said the Financial Market Dealers Association abolished call money, with trading now between overnight placement and Open Buy Backs (OBBs) backed by treasury bills. Dealers say OBB rates should slip back to around 10.25 per cent this week, when monthly budget allocations to government agencies are disbursed. NEW TELEGRAPH