Treasury Bills' (T-bills) rates will edge lower as a result of the Asset Management Corporation of Nigeria (AMCON)'s redemption of N2 trillion bonds with T-bills this month. Analysts at Cordros Capital Limited gave this indication in their monthly report obtained by THISDAY yesterday. T-bills market yields had increased by an average of 50 basis points (bps) in November across the shorter end of the yield curve. The rates had declined by an average 35bps around 160-175 day maturities. However, the analysts said they expect lower yields going forward in the shorter term given the fact that AMCON will redeem N2 trillion with T-bills rather cash. "We expect short term rates to edge lower because AMCON has indicated its intent to redeem cN2 trillion worth of bonds with T-bills rather than cash. And these T-bills are expected to be issued below current market rates. Also, a high volume of open market operations (OMO) redemptions are expected to hit the market in December and January. This is also likely to push rates down," they said. AMCON last week notified the NSE of its intention to redeem its N1.699 trillion zero coupon Series 1 Bond on December 30, 2013 . The bad debt bank has bonds with a face value of about N5.7 trillion, with the Central Bank of Nigeria (CBN) holding about 63 per cent or N3.6 trillion. The balance is held by public and private investors. In a notification to the Nigerian Stock Exchange (NSE), through Chapel Hill Advisory Partners Limited and Stanbic IBTC Capital Limited , AMCON said the N1.699 trillion zero coupon Series 1 bonds due December 31, 2013 under the will be redeemed at par value on December 30, 2013 . According to the corporation, the redemption is in accordance with clause 15 and condition 11.1 of the amended and related trust deed and terms of the Series 1 pricing supplement. The Governor, Central Bank of Nigeria , Mr. Sanusi Lamido Sanusi had in the middle of the year given indication that AMCON would redeem the bonds by the end of the year. He had said the corporation will not owe anybody apart from the CBN after December. "AMCON has bonds with face value of N5.7tn. CBN holds N3.6tn while others belong to other public and private investors. AMCON will pay N1.7tn to private and public holders of its bonds by December. The remaining, which belongs to the CBN will be refinanced and restructured," Sanusi said.
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