CBN to Deflate Nigeria’s Treasury Bills, Set to Sell N150 Billion Worth NTB

The interest rate for Nigeria Treasury Bills (NTB) is set to be deflated as it sells N150 billion worth of the financial instrument, This was disclosed by the Central Bank of Nigeria on Monday.

The CBN reduced the interest rate on treasury bills by 2,760 bpts to 6.99 per cent in October. At the start of the year the apex bank raised interest rate on the 364- Days treasury bills  by 8,540 basis points to 9.75 per cent in April 2021 from 1.21 per cent.

According to Cowry Assets, A financial consulting company in Nigeria  The regressive long-term trend is most likely to continue when the central bank sells N150.82 billion worth of NTB’s

According to Cowry Assets “In the new week, T-bills worth N155.12 billion will mature via the primary and secondary markets to marginally exceed T-bills worth N150.82 billion which will be auctioned by CBN via the primary market; viz: 91-day bills worth N4.80 billion, 182-day bills worth N7.98 billion and 364-day bills worth N138.03 billion. Cowry Research expects the stop rates of the 364-day to moderate amid an expected boost in financial system liquidity.”

Mr. Bismarck Rewane, The CEO of Financial Derivatives Company, explained that the decrease in interest rates on treasury bills and other fixed income monetary instruments is creating a shift in demand by customers to equity, and he further noted that such shift in demand preference would lead to further decline in interest rate.

His words” Speaking at the monthly Lagos Business School Breakfast meeting, Rewane said, “Treasury bills yield to decline further as investors switch to less risky assets such as fixed income. “Yields in fixed income space are declining and forcing investors to rotate portfolios in favor of equities. “

In contrast, fund cost in the interbank money market fell following a N740 billion inflow of  statutory allocation by the Federal Allocation Accounts Committee (FAAC), Therefore interest rate on Collateralised  lending fell by 6000 bpts to 12 per cent last week from 18 per cent the previous week, while interest rate on lending also fell by 6,120 bpts to 12.38 per cent last week from 18.5 per cent the previous week.