CBN auctions first special treasury bill worth N4.1trn at 0.5%

The Central Bank of Nigeria (CBN) on Thursday conducted the first Special Bill auction, offering N4.1 trillion for 81-day tenor to banks from the excess Cash Reserve Ratio (CRR).

On December 2, 2020, the regulator introduced a special 90 days tenor bill with zero coupon as part of efforts to deepen the financial markets.

Ayodeji Ebo, senior economist/head, research & strategy, Greenwich Merchant Bank, said the special bill offered at 0.5 percent has brought some clarity on pricing as other bills yield will move around it. However, BusinessDay gathered that trading is yet to commence on the special bill.

After trading on Friday, the Nigerian Inter-Bank Treasury Bills True Yield (NITTY), a reference rate for tenured money market instruments further moved northwards for all maturities tracked in tandem with the primary market rates, especially at the longer end. Yields for 1 month, 3 months, 6 months and 12 months maturities rose to 0.31% (from 0.04%), 0.40% (from 0.05%), 0.48% (from 0.28%) and 0.79% (from 0.11%) respectively, according to a report by Cowry Asset Management Limited.

Read also: Naira stable as N826.55bn treasury bills, OMO maturities hit financial market

A report by FSDH research noted that NT-Bills secondary market closed on a flat note on Friday, with the average yield across the curve remaining unchanged at 0.45 percent. Average yields across short-term, medium-term, and long-term maturities closed flat at 0.41 percent, 0.44 percent, and 0.49 percent, respectively.

The Overnight (O/N) rate declined by 0.56 percent to close at 0.88 percent as against the last close of 1.44 percent, and the Open Buy Back (OBB) rate also declined by 0.50 percent to close at 0.50 percent from 1.00 percent on the previous day.

“We expect the money market rates to remain in the single-digit territory, barring any significant funding pressure,” analysts at FSDH said.

In the Open Market Operation (OMO) bills market, the average yield across the curve declined by 3 bps to close at 0.42 percent as against the last close of 0.45 percent. Buying interest was seen across short-term, medium-term, and long-term maturities with average yields falling by 3 bps, 2 bps, and 5 bps, respectively. Yields on 9 bills compressed with the 22-Dec-20 maturity bill recording the highest yield decline of 25 bps, while yields on 12 bills remained unchanged.

At the foreign exchange market, naira strengthened further by 0.21 percent (N1.00k) as the dollar was sold at N475 on Friday as against N476 sold the previous day on the black market.

Naira steadied at N480 to the dollar for the seventh time on Friday at the Bureau De Change (BDC) segment of the market.

At the Investors and Exporters (I&E) forex market, Naira appreciated further by 0.15 percent as the dollar was quoted at N394.00 as against the last close of N394.60. Analysts at the FSDH said most participants maintained bids between N382.00 and N408.19 per dollar.

The daily market turnover increased significantly by 180.56 percent to $392.99 million percent on Friday from $140.07 million recorded on Thursday, data from the FMDQ indicated.

A report by Cowry asset showed that Naira/USD closed flat at N380.69/USD at the Interbank Foreign Exchange market amid weekly injections of USD210 million by the CBN into the forex market: USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisibles.