Home Business FG Plans to Borrow $1.1 billion through Treasury Bills

FG Plans to Borrow $1.1 billion through Treasury Bills

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The Federal Government is planning to borrow N218.89bn ($1.1bn) through short-dated Treasury bills on April 7, the Central Bank of Nigeria has said.

The CBN said it would sell N55.40bn of three-month paper, N33.49bn of six-month bill, and N130bn of one-year debt, using the Dutch auction system.

The results of the auction were expected to be released later on Thursday. According to the CBN’s issuing calendar for treasury bills, the same amount of bills on offer will also be due for repayment the day of the auction.

The Federal Government, through the CBN, issues treasury bills as part of a borrowing plan to finance part of the government budget deficit, help manage liquidity in the banking system, and curb inflationary growth.

The CBN had last Wednesday borrowed N114.97bn ($579.05m) through three-month to one-year treasury bills at higher yields.

The Debt Management Office said N18.12bn of three-month paper was sold at 5.99 per cent, up from 5.74 per cent at a sale the previous week.

The central bank raised N13.68bn of six-month debt at 8.3 per cent against 7.95 per cent, while a total of N83.17bn of one-year paper was sold at 9.55 per cent, compared with 9.15 per cent previously.

Total subscription fell to N323.47bn from N409.84bn at the previous auction.

The CBN’s Monetary Policy Committee had last Tuesday raised the benchmark interest rate to 12 per cent from 11 per cent, having cut rates only four months ago by two percentage points, and lifted the Cash Reserve Ratio for Deposit Money Banks to 22.5 per cent from 20 per cent.

Yields on fixed income paper rose after the central bank rate hike. Three-month bills closed at 7.28 per cent on the secondary market, up from 4.92 per cent before the rate rise.

Six-month paper had traded at 8.97 per cent, up from 6.84 per cent, while one-year paper closed at 10.01 per cent against 7.77 per cent previously.

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