CBN Invites Nigerians To Invest, Offers Over N108bn Treasury Bills Across Three Tenors
- Nigerians now have the chance to invest their money in the Central Bank of Nigeria through treasury bills
- The offer is worth over N108 billion with three tenors, each having an expected date of maturity and return on investment
- Investment is one of the major sources of building wealth, and treasury bills offer the pathway to achieve this
Legit.ng journalist Dave Ibemere has over a decade of experience covering business and the economy.
The federal government is looking at raising new funds, and to achieve this, the Central Bank of Nigeria has offered N108.1 billion in Treasury Bills (T-Bills) to Nigerians interested in investing.
The new offer released on CBN website will be across three tenors of 91 days, 180 days and 360 days, Nation reports.
Source: Facebook
How do Treasury Bills work?
Treasury Bills are short-term instruments issued by the Central Bank of Nigeria (CBN), investment are guaranteed and backed with the full faith of the Federal Government of Nigeria.
They are issued at a discount and repaid at the full price of the face value on maturity.
T-Bills are discount instruments because the investor gets its interest upfront. This means that the interest promised on a T-bill instrument is payable on the very day the investment commences.
For instance, if a T-bill promises a 10.0% rate per annum and an investor wants to put in N100,000, the investor pays only N90,000 from the day of investment but gets back N100,000 at maturity.
The maturity value (N100,000) is referred to as face value while the initial investment (N90,000) is discount value.
CBN's Treasury bill
Afrinvest West Africa, one of the investment companies through which Nigerians can buy T-bills, provided a breakdown of the latest CBN offer in a report released over the weekend.
The company stated that the apex bank offered N108.1 billion worth of instruments across three tenors: 91-day (N2.8 billion), 182-day (N7.9 billion), and 364-day (N97.3 billion).
It added that demand at the auction was strong as the bid-to-cover ratio stood at 3.7 times.
It said:
"The 364-day instrument received the most buying interest with a bid-to-cover ratio of 6.3 times, while the ra o of the 182-day and 91-day bills were three times and 1.8 times.
"Compared to the previous auction, the stop rate on the 91, 182 and 364-day instruments rose 2.3 percentage points (ppts), 3.9 ppts, and 3.8 ppts to six per cent, nine per cent, and 13 per cent.
"In the secondary market, the bearish segment lingered as the average yield rose 94bps week-on-week (w/w) to eight per cent."
"This negative outing was influenced by sell-o s on the short (91-day) and mid-dated (182-day) instruments as yield advanced 318bps and 22bps w/w.
Nonetheless, the long-dated (364-day) instrument posted gain as yield fell 58bps w/w.
"In the coming week, we expect the Federation Account Allocation Committee (FAAC) inflow to boost liquidity and drive trade.
Punch reported that the apex bank had also conducted three rounds of T-bills auctions worth N532.5 billion in September 2023.
FG set to borrow N1,000 from every Nigerian, to pay back with high interest
Also, Legit.ng reports that the Nigerian government, via the DMO is offering high-interest-yielding savings bond
A circular by DMO states that the savings bonds are in two tranches, the 2-year bond and 3-year bonds
The DMO stated that the bonds would mature in 2023 and 2025, respectively and charged upon the assets of the Nigerian government
Source: Legit.ng
