Indications have emerged that the robust system liquidity drove high demand at the Nigeria Treasury Bills (NTB) auction held last week, with total subscriptions at N321.13 billion against N36.56 billion offered, representing N284.57 billion over-subscription.
Market participants said the three tenors had oversubscription at N5.65 billion, N9.65 billion, and N305.83 billion for 91-day, 181-day, and 364-day respectively, compared to N2.78 billion, N3.02 billion and N30.76 billion offered.
The stop rates dropped across the three tenors at 3.67 percent, 5.11 percent, and 9.25 percent for 91-day, 182-day and 364-day, respectively.
Despite the robust system liquidity, the Treasury bill market had a quiet session from Monday to Wednesday as investors anticipated the NTB primary auction. The unmet demand at the auction fed into the market on Thursday and Friday, reducing the average yield by 1435 basis points (bps) week-on-week to 5.85 percent.
The Open Market Operation (OMO) bills had selloffs last week, with the yield rising by 605bps week-on-week to 12.09 percent.
In the same vein, the N150 billion sovereign Sukuk bond offered by the Debt Management Office (DMO) received an oversubscription of 435 percent valued at N652.85 billion. This reflects the high investors’ appetite and willingness to support infrastructure financing.
Eventually, the DMO sold only N350 billion higher than the N130 billion Sukuk bond sold in 2022. Analysts believe the fragile economic conditions increased investors’ appetite for less-risk assets, favouring the Sukuk bond.
