UPCOMING NTB AUCTIONS IN Q4 2024
1. Auction Dates and Amounts:
- October 9-10, 2024:
- The Central Bank of Nigeria (CBN) will re-issue Nigerian Treasury Bills (NTBs) worth N81.9 billion.
- Though smaller compared to other auctions in the quarter, this issuance is significant for maintaining liquidity in the financial markets.
- October 23-24, 2024:
- A larger re-issuance program will occur, with a total of N374.7 billion being auctioned.
- The auction will cover three different maturities: 91-day, 182-day, and 364-day NTBs.
- November 6-7, 2024:
- The second-largest re-issuance of the quarter will take place, with N513.4 billion worth of NTBs being auctioned.
- This significant issuance is expected to attract substantial interest from investors looking for secure and high-yield investments.
- November 20-21, 2024:
- The final auction of the quarter will see N610.8 billion worth of NTBs issued.
- This will ensure that the financial system remains liquid as the quarter ends, providing the government with the necessary funds to meet its short-term obligations.
STRATEGIC IMPORTANCE OF NTB RE-ISSUANCE
- Liquidity Management:
- The re-issuance of NTBs is a strategic tool used by the CBN to manage liquidity within the financial system. By doing so, the CBN can control inflation and stabilize the naira.
- Government Financing:
- Rolling over maturing bills helps mitigate the impact of these obligations on government finances. It also provides investors with relatively safe investment options.
CONCERNS AND INTEREST COSTS:
- Rising Interest Rates:
- The CBN's hawkish monetary policy in 2024 has led to higher interest rates on NTBs, which in turn has increased the cost of borrowing for the government.
- In the first half of 2024, the CBN incurred an estimated N1.55 trillion in interest payments from 12 successful Treasury Bills auctions, which is a 654.7% increase compared to the previous year.
- Stop Rates:
- The stop rates (interest rates accepted from bids) ranged from 2.44% for some 91-day bills to as high as 21.49% for 364-day bills within the period under review.
- NTB Issuances in H1 2024:
- Data from the CBN reveals that a total of N8.4 trillion worth of Treasury Bills were sold in the first half of the year, with tenors ranging from 91 days to 364 days.
CONCLUSION:
The CBN's re-issuance program in Q4 2024 is a critical aspect of its broader strategy to manage the financial system's liquidity, curb inflation, and stabilize the economy. However, the rising interest rates pose challenges, increasing the government's borrowing costs and raising concerns about the sustainability of such high-interest payments.
1. Auction Dates and Amounts:
- October 9-10, 2024:
- The Central Bank of Nigeria (CBN) will re-issue Nigerian Treasury Bills (NTBs) worth N81.9 billion.
- Though smaller compared to other auctions in the quarter, this issuance is significant for maintaining liquidity in the financial markets.
- October 23-24, 2024:
- A larger re-issuance program will occur, with a total of N374.7 billion being auctioned.
- The auction will cover three different maturities: 91-day, 182-day, and 364-day NTBs.
- November 6-7, 2024:
- The second-largest re-issuance of the quarter will take place, with N513.4 billion worth of NTBs being auctioned.
- This significant issuance is expected to attract substantial interest from investors looking for secure and high-yield investments.
- November 20-21, 2024:
- The final auction of the quarter will see N610.8 billion worth of NTBs issued.
- This will ensure that the financial system remains liquid as the quarter ends, providing the government with the necessary funds to meet its short-term obligations.
STRATEGIC IMPORTANCE OF NTB RE-ISSUANCE
- Liquidity Management:
- The re-issuance of NTBs is a strategic tool used by the CBN to manage liquidity within the financial system. By doing so, the CBN can control inflation and stabilize the naira.
- Government Financing:
- Rolling over maturing bills helps mitigate the impact of these obligations on government finances. It also provides investors with relatively safe investment options.
CONCERNS AND INTEREST COSTS:
- Rising Interest Rates:
- The CBN's hawkish monetary policy in 2024 has led to higher interest rates on NTBs, which in turn has increased the cost of borrowing for the government.
- In the first half of 2024, the CBN incurred an estimated N1.55 trillion in interest payments from 12 successful Treasury Bills auctions, which is a 654.7% increase compared to the previous year.
- Stop Rates:
- The stop rates (interest rates accepted from bids) ranged from 2.44% for some 91-day bills to as high as 21.49% for 364-day bills within the period under review.
- NTB Issuances in H1 2024:
- Data from the CBN reveals that a total of N8.4 trillion worth of Treasury Bills were sold in the first half of the year, with tenors ranging from 91 days to 364 days.
CONCLUSION:
The CBN's re-issuance program in Q4 2024 is a critical aspect of its broader strategy to manage the financial system's liquidity, curb inflation, and stabilize the economy. However, the rising interest rates pose challenges, increasing the government's borrowing costs and raising concerns about the sustainability of such high-interest payments.