The Central Bank of Nigeria is to raise N122.95bn ($617.90m) via treasury bills with tenors ranging from three months to one year on Wednesday, documents from the bank have revealed.
The CBN said on Monday that it would raise N45.17bn in the three-month bill, N23.43bn in the six-month and N54.35bn in the one-year, using the Dutch auction system.
Reuters quoted money market traders as saying that yields on the papers were expected to be lower than the returns at the last auction held on October 24, when yields on the three-month paper were 8.49 per cent, the six-month debt attracted 10.15 per cent and one-year paper fetched 10.81 per cent.
The expectation of lower yields was based on the prevailing returns on the secondary market and the high level of liquidity in the money market.
Meanwhile, yields on Nigeria’s local currency- denominated bonds are expected to rise this week as offshore investors and some local investors sell holdings.
“We are anticipating a massive sell off this week from some offshore investors still holding their positions in the market,” one dealer said, adding some local pension funds could follow suit.
JP Morgan was expected to remove Nigerian bonds from its emerging market government bond index by the end of October, prompting the shift out.
Yields on the benchmark, 2024 paper dropped to 13.49 per cent on Friday from 13.60 per cent the previous week, but are seen rising above 14 per cent level this week.
“A sell-off either by the remaining offshore investors in the market or pension funds ahead of the auction on November 11, would lead to increased yields in the near term,” a senior treasurer said.
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