As part of measures to control money supply in circulation, the Central Bank of Nigeria (CBN) has concluded plans to auction treasury bills worth N149.27 billion at its regular debt auction next week.

The regulator said it would sell N49.27 billion in 91-day paper and N50 billion each in 182-day treasury bills and 364-day bills this Wednesday, using the Dutch Auction System (DAS).

“Each bid must be in multiples of 1,000 naira subject to a minimum of 10,000,” the central bank said in a public notice.

Apart from reducing monetary supply, the apex bank  issues treasury bills regularly as part of measures to curb inflation and help banks manage their liquidity.

Meanwhile, the interbank lending rates closed at an average of 13.50 per cent last week, easing from 15.50 per cent the previous week, following the release of some of December’s budgetary allocation to government agencies.

The borrowing rate opened the week at 12.25 per cent on large budgetary inflows, but rose back up to Friday’s close after the CBN mopped up liquidity by selling treasury bills.

“A portion of December budget allocations to state and local governments finally hit the system on Monday, helping to boost liquidity level and this reflected in the cost of borrowing at the interbank,” one dealer said.

December budgetary allocations were delayed for over two weeks, causing a liquidity squeeze in the system, pushing up cost of borrowing in the interbank market last week.

The government shares proceeds from oil sales from a centrally held account every month to its three tiers of government - federal, states and local - providing liquidity to the banking system and impacting on lending rates.

The secured Open Buy Back (OBB) eased to 14.0 percent from 15.0 per cent last week, 200 basis points above the central bank’s 12.0 per cent benchmark rate, and 4.0 percentage points above the Standing Deposit Facility (SDF) rate.

Overnight placement dropped to 13.50 percent from 15.50 per cent, while call money traded at 14.0 per cent against 16.0 per cent last week.

“The market is expected to tighten up next week, while lending rates should climb higher because of the aggressive liquidity mop-up exercise by the central bank and regular funding for foreign exchange and treasury bills purchases,” another dealer said.