By Omodele Adigun
The Debt Management Office (DMO), has raised a total of N304 billion from the sales of both short-dated Treasury Bills (TBs) and FGN bonds as part of measures to finance the budget deficit and help manage liquidity in the banking system.
A breakdown shows that the debt office raised N183.24 billion from TBs auction on Wednesday, with mixed yields on all the tenors. It also raised N121 billion in an auction of FGN bonds with yields higher across the board.
The debt office raised N48.10 billion of three-month paper at 14 per cent, down from 14.38 per cent at the August 31 auction. It also sold N48.45 billion worth of the six-month paper at 17.77 per cent, higher than the previous 17.50 per cent.
A total of N86.69 billion was sold in the one year debt at 18.48 per cent against 18.42 per cent at the last auction.
As for the bonds, the debt office also sold N15 billion of 2021 paper at 15.14 per cent at Wednesday’s auction, compared with 15.08 per cent at the previous auction last month.
It also sold N30 billion of 2026 debt at 15.53 per cent, against 15.28 per cent, and N60 billion of 2036 debt at 15.59 per cent, compared with 15.53 per cent.
The debt office also allotted an additional N16 billion worth of the 2021 debt on a non-competitive basis to mandate clients.
The Federal Government has said it would borrow about N900 billion locally to finance part of the N2.2 trillion deficit in its 2016 budget to plug shortfalls.
Recall that the Central Bank of Nigeria (CBN) repaid around N293 billion in matured bills to some commercial banks last Thursday, increasing liquidity and forcing down borrowing costs among banks.
The cost of overnight borrowing among banks had reached 35 per cent the previous day after cash squeeze hit the market. Some commercial lenders resorted to borrowing at the central bank discount window to help meet their immediate obligations.
It is the regular practice of the apex bank to sell dollars in the interbank foreign exchange market to support the weak naira, and selling TBs to curb speculation against the local currency.
The CBN sold N139.42 billion of TBs in open market operations just last Thursday at 18.5 per cent to reduce system liquidity. But the market cash balance remained up at N51.65 billion last Friday against an N87 billion deficit prior Wednesday.
The overnight lending rate had closed last week at 16 per cent but gradually climbed to 35 per cent on Wednesday, then eased marginally to 20 per cent on Thursday after the cash from matured TBs reached the system.