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The Central Bank of Nigeria (CBN) is planning to raise N177 billion ($562 million) of short-dated treasury bills at an auction on July 5, the regulator said yesterday.

The bank said in a public notice it planned to sell N35 billion of three-month debt, N22 billion of six-month bills and N120 billion of one-year notes at the auction, using a Dutch auction system.

The CBN issues treasury bills twice a month to finance the budget deficit, help manage commercial lenders’ liquidity and curb rising inflation.

The West African country expects its budget deficit to widen to N2.36 trillion this year as it tries to spend its way out of a recession, with more than half the deficit to be funded through local borrowing.

The apex bank has in the last two months, issued short-dated treasury bills to mop-up what it perceived as excess liquidity and curb speculation on the local currency.

Nigeria expects to face a budget deficit of about N2.21 trillion for the year as it tries to wriggle its way out of recession. It expects to raise money to cover more than half the deficit through domestic borrowing.

The bills’ maturities range between three months and a year and would be raised today, according to the CBN. They are marketable short-term money market securities that serve the purpose of raising money for the government and also help in monetary policy management of the CBN.

The CBN issues treasury bills to raise cash to fund the government budget deficit, helps manage banking system liquidity and curbs rising inflation.

The CBN on August 3 last year, raised N245.18 billion ($773.44 million) worth of T-bills to settle short-term obligations. It also issued N45.18 billion in three-month debt, N80 billion of six-month paper and N120 billion of one year bills in a Dutch auction, Treasury Bills traders said.




Source: http://thenationonlineng.net/cbn-raise-n177b-via-treasury-bills-auction/

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