Chimara BygoldDomestic investors now focus more on short-term lending to the Federal Government in anticipation of uncertainties and the outcome of the crucial 2023 general election.
This showed in the profile of domestic borrowing activities of the FG in the nine months period to September 2021.
The results depict an increased preference for short-term lending to the Federal Government through its Nigeria Treasury Bills (NTBs) debt instrument.
Nigerian government, in an apparent reflection of its efforts to finance the Budget 2021 deficit of N5.62 trillion, increased borrowing from local investors by 18 per cent in nine months to N5.6 trillion as at September 30, 2021, from N4.6 trillion in the corresponding period in 2020.
Unlike FGN bonds which are debt instruments with a maturity of more than one year, NTBs are debt instruments with a maturity of less than one year.
Indicating rising preference for short term lending to the FG, NTBs accounted for 63 per cent or N3.44 trillion of the domestic borrowing in the nine months ending September 2021 (9MTH-21).
On the other hand, FGN bonds, and FGN savings bonds accounted for 36 per cent or N2.02 trillion and 0.1 per cent or N7.4 billion respectively.
Meanwhile, there are expectations in the money market that the relatively small amount of T-bills will be refinanced at lower rates amid expected high demand.
According to dealers, in the new week, T-bills worth N45.86 billion will mature via the primary and secondary markets to exceed T-bills worth N5.86 billion which will mature through the primary market; viz: 91-day bills worth N0.96 billion and 182-day bills worth N1.10 billion and 364-day bill worth N3.80 billion.
Similarly, dealers from Cowry Assets Managements Limited said “we expect the value of FGN Eurobonds to further rise (and yields to decrease) as rates remain attractive at an upper band of 8 per cent.
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