The Central Bank of Nigeria (CBN) is planning to borrow N129.17bn ($649.10m) worth of local currency denominated treasury bills with maturities range of three-month and one year on December 2.
The CBN said it would issue N17.85bn worth in the three-month paper, N18bn in the six-month paper and N93.32bn in the one-year bill, using the Dutch Auction System.
Yields on Nigeria’s bonds fell below 10 per cent across maturities as trading started on Wednesday, traders said, a day after the CBN announced a surprise interest rate cut aimed at stimulating lending in the economy.
Traders said they were expecting lower returns on the short-date paper at the auction next week in tandem with the prevailing trend in the secondary market,
The CBN had borrowed N119.92bn ($600m) via treasury bills with maturities from three months to a year at an auction last Wednesday.
The yields on the T-bills were further reduced compared with the returns at previous auctions.
The result of the auction showed that the CBN sold N32.43bn worth of three-month paper at 5.34 per cent compared with 5.82 per cent at the November 4 auction.
It also sold N22.82bn worth of six-month debt at 7.2 per cent against 7.98 per cent previously, and N64.67bn of one-year paper sold at 8.5 per cent, down from 9.48 per cent, the auction results showed.
Total demand for the paper also dropped to N301.04bn compared with N535.86bn demanded by investors at the last auction.
Traders said the drop in yields was a reflection of trends in the secondary market, where yields had fallen to 1.94 per cent, 6.16 per cent and 6.93 per cent for three-month, six-month and one-year debt respectively.
The CBN has been injecting cash into the money markets since September in a bid to ease liquidity and reverse declining growth in Nigeria, which has suffered following the sharp fall in oil prices.
Traders said the CBN had not issued open market bills in three months to keep borrowing costs low, causing a liquidity surge which has shrunk bond yields to more than five year lows for some maturities.
Vice President Yemi Osinbajo had proposed a budget of N7tn to N8tn ($40.2bn) for 2016, up from N4.4tn this year, but did not say how it would be funded.
