Nigeria increases domestic borrowing by 100.8 bln naira at T-bill auction

Nigeria borrowed 100.84 billion naira via the sales of treasury bill at an auction on Wednesday in its bid to close its budget gap which was projected at 2.36 trillion naira in this year's budget.

This year's budget projects spending of 7.44 trillion naira with a deficit of 2.36 trillion to be borrowed from both domestic and international market to bridge the gap.

The success at the treasury bill auction was spurred by the decision of traders locked in yields in ahead of plans by the central bank to release excess cash deposited for the purchase of foreign exchange at its intervention early in the week.

At the auction, the Central Bank of Nigeria (CBN) sold 74.76 billion naira of one-year debt at a rate of 15.53 percent, slightly lower than the previous auction, traders said. 

It had initially offered to sell 54.35 billion naira in that maturity.
Traders said the bank also sold 12.98 billion naira of six-month bills and 13.09 billion naira of three-month paper at 13.1 percent, unchanged from the last auction.
Currency dealer said about 420 billion naira in matured open market bills was expected to hit the banking system on Thursday, while additional cash from excess payment for forex purchase is also expected to be reinjected into the system, spurring buying at the auction.
Nigeria’s central bank issues treasury bills regularly to help lenders manage their liquidity, curb rising inflation and provide naira to help the government fund its budget.