The Central Bank of Nigeria (CBN) is targeting a net withdrawal of about ₦369.16bn from the financial system through a ₦450bn treasury bills auction, as investors await fresh inflation figures that could influence yields on government securities.
The auction, conducted on behalf of the Federal Government by the Debt Management Office (DMO), allocates ₦350bn to 364-day bills, while the 91-day and 182-day instruments will receive ₦50bn each.
The 364-day bills account for 77.8 per cent of the total offer, highlighting the government’s continued reliance on one-year instruments to raise short-term domestic funds.
The planned withdrawal is based on the assumption that the entire ₦450bn offer will be allotted. With ₦80.84bn in treasury bills due to mature at settlement, the net liquidity mop-up would amount to approximately ₦369.16bn. The final figure will depend on the amount allotted.
The latest offer is below the ₦900bn advertised at the opening auction of the fourth quarter on October 7, when the DMO allotted ₦968.47bn, exceeding its target.
Demand was strongest for the 364-day bills, which attracted subscriptions of ₦1.683tn against an offer of ₦700bn. The one-year instrument’s stop rate fell to 15.85 per cent from 15.89 per cent at the preceding auction.
The rate was also below the third-quarter peak of 17.70 per cent recorded on July 8, indicating that investors were accepting lower yields on the one-year securities.
Shorter-dated bills attracted less interest at the October 7 auction. The 91-day instrument received subscriptions of ₦39.42bn against an offer of ₦100bn, with ₦38.55bn allotted at a stop rate of 15.50 per cent.
Combined subscriptions for the 91-day and 182-day instruments stood at ₦86.29bn against a combined offer of ₦200bn, reinforcing the concentration of demand in longer-dated bills.
The auction comes as the government plans to offer ₦5.40tn in treasury bills during the fourth quarter, compared with approximately ₦5.429tn in expected maturities.
Of the planned issuance, ₦2.15tn is scheduled for October through three auctions. The ₦450bn offer is the smallest in the quarter’s issuance calendar and is below the smallest scheduled offer of ₦500bn in the third quarter.
However, actual borrowing could exceed the advertised amounts. In the third quarter, the DMO raised ₦8.14tn against planned offers of ₦5.80tn, with one-year bills accounting for a substantial share of the allotment.
Investors are also watching the National Bureau of Statistics’ inflation report, scheduled for release on Thursday, October 15. The figures could shape expectations about monetary policy and the returns investors demand on government securities.
Inflation, market liquidity, investor appetite and the government’s borrowing needs are expected to remain key factors influencing treasury bill yields.
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