The Central Bank of Nigeria (CBN) is offering ₦800 billion in Nigerian Treasury Bills (NTBs) at Wednesday’s auction, as government securities worth ₦872.55 billion fall due for repayment.
The auction, being conducted on behalf of the Debt Management Office (DMO), covers the 91-day, 182-day and 364-day instruments, with the one-year bill accounting for 75 per cent of the total offer.
According to an invitation to tender obtained by Nairametrics, the CBN has allocated ₦100 billion each to the 91-day and 182-day bills, while the 364-day instrument accounts for the remaining ₦600 billion.
The amount being offered is ₦72.55 billion below the value of securities maturing on November 4, meaning repayments will exceed fresh borrowing if the DMO allots the entire advertised amount.
The maturing securities comprise ₦67.68 billion in 182-day Treasury Bills and ₦804.87 billion in 364-day instruments.
Money market dealers are required to submit bids through the CBN’s S4 WEB INTERFACE between 8 a.m. and 11 a.m. on Wednesday. Allotment letters are scheduled for issuance to successful bidders on November 5, with payment due by 11 a.m. the same day.
The auction comes amid substantial liquidity in the banking system, which stood above ₦7.7 trillion at the close of business on November 3, following the settlement of ₦2.016 trillion in maturing Open Market Operations (OMO) instruments.
The significant liquidity could support investor demand for the Treasury Bills, as holders of maturing securities consider reinvesting their funds in new government debt instruments.
However, strong investor demand may not necessarily translate into higher allotments, given the DMO’s recent approach to limiting the volume of securities sold.
At the October 28 auction, investors submitted bids worth ₦1.908 trillion against an advertised offer of ₦800 billion, representing subscriptions of about 2.38 times the offer.
Despite the oversubscription, the DMO allotted only ₦71.16 billion, representing approximately 8.9 per cent of the amount offered.
The 364-day instrument attracted the highest demand, with subscriptions of ₦1.84 trillion against an offer of ₦600 billion. However, only ₦38.38 billion was allotted.
The auction also saw stop rates decline to 15.40 per cent for the 91-day bill, 15.79 per cent for the 182-day instrument and 15.80 per cent for the 364-day bill.
The latest auction will provide another indication of the DMO’s borrowing strategy, particularly its willingness to reject substantial investor bids rather than accommodate higher borrowing costs.
Its outcome will also determine the extent to which the repayment of maturing securities translates into additional liquidity in the banking system.
