The Nigeria Treasury bills are government-guaranteed debt instruments issued by the CBN on behalf of the Nigerian government. It is a short-term securities issued at a discount for a tenor ranging from 91 to 364 days. The profit from the investment is the income received is the difference between the purchase price and the amount received at maturity or before the sale.
Benefits of Investing in Nigerian Treasury Bills
1. Your yield(interest) on the TB investment is redeemable upfront, you can decide to automatically reinvest it for a higher income.
2. The yield or Income on the investment is very competitive with returns on other money market instruments of similar maturities.
3. The securities have zero-default risk.
4. The yield on investment is tax-free.
5. The securities can be used as collateral for short-term borrowing from banks.
6. They are bearer securities and negotiable.
7. The treasury bill can be traded on the stock exchange
Investors Eligibility
Any member of the public can invest in the Nigeria Treasury bills; individuals, Corporate Bodies (Private and Public), Institutions (Private and Public), Banks, Discount Houses, and Brokers.
Investment Procedure
Investing in treasury bills is by auction Subscriptions at the market for 91,182, 365 and 730 days. An advertisement, inviting bids for the securities is placed in advance of the auction.
CLICK TO READ LATEST ON CBN TREASURY BILLS AUCTION DATE
Interested investors should obtain and complete application forms through authorized dealers (Banks and Discount Houses and Stockbrokers).
Before now, a minimum value of N10,000 is required to invest in the Nigeria treasury bills auction in the primary market, before the Federal Government increased it to N50 million in March 2017. The good news however is that investors with low capital can still invest in treasury bills, money deposit Banks and mutual fund managers have designed products that pool customers’ funds to meet the minimum N50 million investment threshold.
The bank/broker will then apply to bid for treasury bills and equally share the interest to all the fund contributors based on their personal contributions.
For instance, an investment of N200,000 in a pool of funds that invested in the 364-day treasury bill, with an 18% interest rate, the bank/broker is expected to pay you N36,000 as your gross interest/profit earned, or, they could just deduct N164,000 from your account as the investment.
NOTE: You can reinvest the interest and the banks will charge a fee for the service, which ranges among banks.
The amount of securities being applied for must have a minimum value of N10,000 and in multiples of N1,000 thereafter.
Tenders for Treasury Bills are usually submitted on Mondays, Tuesdays, and Wednesdays before 1.30 p.m on the prescribed printed forms and in a sealed envelope marked “TENDER FOR BILLS OR CERTIFICATES”.
Pricing and Allotment: Successful subscribers at the auction are allotted applying the Dutch auction system, Multiple price auction systems. Under the system, successful applicants pay for their allotment at the price quoted by them.
The result of the tender is announced before the close of business on Wednesdays. Allotment letters are issued to successful tenders on Thursday while payment in full for the amount of the successful tender must be made to the CBN not later than 1.30 p.m on the issue date – Thursdays.
