Despite rising negative real returns, the demand for Nigerian treasury bills has rocketed. The NTB auction held on July 12, 2023, had a total subscription of N681.86bn against N141.77bn offered, showing investors’ preference for risk-free instruments. The high subscription was across the three tenors; N5.816bn for 91-day, N31.38bn for 182-day, and N654.62bn for 364-day, driving stop rates lower for all three tenors. The 91-day, 182-day, and 364-day stop rates dropped to 2.86%, 3.50%, and 5.94% compared to the previous auction, as DMO sold only N147.77bn offered. Recently, system liquidity has determined the direction of the NTB auction subscription, suppressing other main determinants. However, analysts expect immediate future monetary policy outcomes to change the market’s direction; a future rate hike would dial down subscriptions as liquidity stumbles (see Table 1 below).
Table 1:
