THE Central Bank of Nigeria (CBN) will today conduct the final Treasury Bills Primary Market Auction (PMA) for July, offering N700.00 billion across three tenors in a session marked by the absence of maturing bills and mixed implications for yields and liquidity.
The offer comprises N100 billion of 91-day bills, N100 billion of 182-day bills and N500 billion of 364-day bills. With no Treasury bill maturities falling due this week, the auction will result in a net liquidity withdrawal of N700 billion from the system. Market analysts note that the lack of reinvestment demand from maturing securities is expected to temper subscription pressure, while simultaneously easing the CBN’s immediate refinancing needs and reducing any compulsion to raise stop rates to attract funds.
According to Meristem Securities, the situation presents mixed implications. ‘While it removes reinvestment demand from maturing securities, it also reduces the CBN’s immediate refinancing pressure, limiting the need to offer higher rates to attract subscriptions. On balance, we expect clearing rates to remain broadly stable, with a downward bias, particularly on the 364-day tenor.’
The previous PMA underscored resilient investor appetite. The CBN had cut the total offer to N600.00 billion from N700.00 billion earlier, yet total subscriptions surged 49.30 per cent to N3.03 trillion. Allotment rose 11.87 per cent to N1.19 trillion, with the bulk concentrated in the longest tenor, improving the allotment-to-offer ratio to 1.98 times. Stop rates held steady at 16.30 per cent for the 91-day and 16.50 per cent for the 182-day bills, while the 364-day rate edged lower to 17.66 per cent from 17.70 per cent.
Secondary market activity has remained supportive. Average T-bill yields eased to 18.26 per cent as of July 27 from 18.32 per cent on July 15, reflecting sustained demand. Headline inflation’s modest decline to 15.91 per cent year-on-year in June from 15.93 per cent in May has further strengthened the case for lower primary rates at the long end. However, stable outcomes at the recent FGN bond auction and an unchanged OMO sale suggest authorities remain comfortable with the prevailing interest-rate environment.
Market participants will watch subscription levels closely, particularly whether strong demand translates into lower clearing rates on the 364-day bill. The result will provide insight into the CBN’s near-term funding strategy and its assessment of liquidity and inflation dynamics as July’s borrowing programme concludes.