The move, coming amid revenue shortages and plans to raise more than N800 billion in the same domestic market for 2019 budget implementation, may have been targeted at short-dated bills only.
The Federal Government’s debt reduction strategy since 2017 has been focused on achieving a sustainable balance between the assessed costly domestic debts and relatively cheap external debts, targeting a ratio of 60:40.
Part of the $3billion Eurobond floated between November 2017 and early part of 2018, was used to redeem local debts, adjudged to be costlier than dollar-denominated loans.
Going by the Treasury Bill Issue programme for the first quarter of 2019, being managed by the CBN, rather than borrowing, it would be redeeming a fraction of the debts instruments.
Specifically, in the next three months, 91-day, 182-day, and 364-day treasury bills worth N985.92 billion would be maturing, but CBN would only roll over N823.43 billion, redeeming N162.49 billion.
An analysis of the treasury bills programme shows that five activities would be conducted in each category until February 28, with 91-day bill rolling over N51.46 billion out of outstanding N59.02 billion.
In the 182-day segment, out of outstanding bill of N248.84 billion, about N164.92 billion would be rolled over, while N83.93 billion would be redeemed.
Similarly, the 364-day treasury bill, in the period under review, would shed weight by N71.01 billion, as N607.05 billion would be rolled over, out of outstanding N678.06 billion.
The Head of Research at FSDH Merchant Bank Limited, Ayodele Akinwunmi, in a note to The Guardian at the weekend, however, noted that the government borrowing would still increase due to macroeconomic issues, thereby accelerating interest rate increase.
According to him, the cancellation of treasury bills’ primary auction last December might have reduced the investors’ foreign exchange inflow.
The uncertainty around the country’s major earner- crude oil, predisposes the economy to more borrowing and if the situation becomes worse, the borrowings at the domestic market will be more costly, as interest rate would be raised to lure more foreign investments.
He said capital inflows through the Investors and Exporters’ (I&E) window in December 2018, had fallen to $2.67 billion, from $2.91 billion in November, “coupled with the careful investment approach in Nigeria because of election by investors.”
For the Managing Director of Afrinvest Securities Limited, Ayodeji Ebo, this week, the apex bank is scheduled to repay N429.6 billion maturing treasury bills with the same sum rolled over.
“We expect rates at the auction to remain at attractive levels in line with recent trend while we anticipate a near muted activity in the secondary market.
“Also, in line with its tight system liquidity posture, we expect conduct of Open Market Operation auctions by the CBN this week to offset maturities worth N560.9 billion.”