All the Basics You Need to Know
What are Treasury Bills ?
Treasury bills are discountable instruments used by the Central Bank of Nigeria (CBN) to manage liquidity in the system, usually on a short-term basis. The yields are far higher in comparison to what the money market offers. The issuer of the bills is the Federal Government through the Central Bank of Nigeria (CBN). Interests are paid upfront allowing investors take advantage of time value of money.
When and how are Treasury Bills sold?
Treasury Bills are sold every other Wednesday (bi-weekly) through an auction conducted by the CBN.
How can I invest in Treasury Bills?
We have arrangements for our client’s who want to invest in this product through one of our subsidiaries. Contact us to find out more.
How much can I invest?
The minimum investment in Treasury Bill is N100,000 and no maximum investment.
Benefits of Treasury Bills
. Treasury Bills are tax free
. Treasury Bills are considered to have zero default risk
. Interests are paid upfront allowing investors take advantage of time value of money
. Treasury Bills are a good for clients with disposable cash and those who wish to save
What are the interest rates for Treasury Bills?
CBN determines the stop rate after the end of each bid. We are expected to bid within the rate not to lose out.
What is the tenor for Treasury Bills?
You can invest in Treasury Bills for 91 days, 182 days or 364 days.
Can I terminate before Maturity?
Yes, you can sell your Treasury Bills before maturity. Any client who wishes to terminate their investment before maturity can do so at a rediscounted rate which is not always advisable.
Can I rollover my investment?
Any client can rollover their investment should they choose to do so.
Mr. Ali Danjaji brought N1,000,000 to be invested in Treasury Bill for 3 months where the rate is 11%:
Principal Amount = N1,000,000
Rate = 11% (less our charge of 1%) =10%
Tenor = 91 days (i.e. 3 months)
Therefore the upfront interest is = N1,000,000 x 0.1 x 91/365 = N24,931.51
There are other products that you can also take advantage of like fixed deposit with has a higher interest with withholding tax on the interest. You can invest in it for any desired tenure.
For further information please contact us via email at firstname.lastname@example.org. Alternatively, you can call us on the numbers below:
+234 909 889 3814, +234 909 889 3819