Why Fitch Is Not Happy With CBN’s T-Bill Slowdown
So, according to treasury bills calendar of the CBN, the treasury bills offer for this year will be a little less than offered last year and previous years.
Now, an international credit rating agency, Fitch Ratings, is saying this hurt Nigeria’s economy, especially the banking sector.
Fitch specifically predicted that the CBN’s Treasury Bills slowdown may impact negatively on banks’ profits in 2018.
Also Read: Why You Should Invest In Treasury Bills Now
The international agency on Thursday lists Guaranty Trust Bank Plc, Zenith Bank Plc, Access Bank Plc, United Bank for Africa Plc, among others, as some of the banks that might find it more difficult to sustain profitability given the decline in net Treasury bill issuance in the first quarter of 2018 issuance programme of the CBN.
CBN’s slowdown in T-bill issuance marks a change of strategy as the Federal Government looks to increase its financing from borrowing more money outside the country and more long-term debt within.
“We expect falling T-bill yields and lower issuance to put pressure on Nigerian banks’ profitability in 2018,” Fitch said in a statement on Thursday.
Read More: How To Invest In Treasury Bills
The CBN’s latest issuance schedule shows 1.1 trillion naira of rollovers in first quarter of 2018 against 1.3 trillion of maturing bills. In 2017, rollovers fully covered maturing bills.
Fitch explained that, “performance metrics at all banks will be affected by weak demand for lending, falling T-bill yields, lower foreign-currency translation gains and rising loan impairment charges, but the largest banks are best placed to withstand these challenges”.
Also Watch: Treasury Bills: How To Calculate Your Earnings