How Do I Invest in Treasury Bills in Nigeria – Treasury Bill Rates Today in Zenith, GTBank, FirstBank, Access, Stanbic IBTC, Ecobank, Sterlings, Fidelity, Union Bank & FCMB 2019
This guide is for investors that are looking for alternative investment opportunities in the fixed income market. In my previous investing tips on where you should invest your money, I mentioned TB among other places you can grow your money.
Let’s Discuss Treasury Bills
Treasury Bills are government debt instruments issued by Central Bank of Nigeria on behalf of the former to finance expenditure. The instrument is sold through a bi-weekly auction conducted by the Central bank in Primary Market Auction. Buyers are requested to quote bids following which the average minimum bid is selected.
Steps to Buy Treasury Bills in Primary Market:
To buy Treasury Bills you will have to approach your bank requesting for a form. You fill the form with your personal information also indicating the amount you want to buy as well as your bid rate. However, with the advent of a bank’s treasury bills mobile application, buyers are only required to fill a signup form once.
Nowadays, the easiest way is through Sterlings Bank’s Treasury bill mobile app. The app is accessible to all irrespective of their bank. Gone are the days when the idea of investing in treasury bills meant owning millions in order to invest.
With I-invest app, just about anyone with a minimum of a hundred thousand Naira (N100,000) can go into the Treasury business, Irrespective of one’s knowledge of financial investment, the app makes it so easy of r a novice to start.
What is Treasury Bill Bid Rate
The bid rate is the likely interest rate that buyers have indicated to receive for the principal they are investing in the TB. The apex bank then selects the bids that fall below the accepted marginal rates. The Marginal Rate is the minimum average rate for bids submitted within a bid window while those above are rejected.
You can also buy Treasury Bills from the secondary market or Over The Counter market through a registered stockbroker.
For investors that want to sell their securities before maturity, this is done through the OTC market. The price at which you sell depends on the forces of demand and supply.
When is the interest on Treasury Bills paid?
The interest element of a treasury bill is paid to you upfront and credited to your bank account, The good thing is interest earned from Treasury Bill isn’t taxable. However, investors can give their bank a mandate to roll over the Treasury Bill upon maturity.
Is my money safe?
Treasury Bills are one of the safest forms of investment and are backed by the full faith of the Federal Government of Nigeria.
When is the best time to invest in Treasury Bill and get a higher return?
Treasury Bill rates vary from 30 days, 60 days, 90 days, 180 days, and 365 days but you return (CBN offers) is largely driven by economic risk and oil prices. When oil prices are plunging as we saw in 2014-2015, government revenue from the international market reduces, to help cushion the effect, they issue local debt instrument like Treasury Bills through the CBN at a higher rate to attract investors while the reverse is the case when oil price increases.
What is the disadvantage of Treasury Bills?
While TBills are risk-free, you need to understand that the investment return is subject to inflationary risk. If your recent 1-year TB earns you 15% but Inflation rate is 16%, your net return on the fixed income instrument is “minus 1” (16% – 15%). This means, that T-Bill investment is profitable when the rate of return is higher than Inflation rate.
How to do get today’s rate on Treasury Bills?
Go to the CBN website for more information on 30, 90, 180 and 365 days T-Bill rates.
To answer the question, Treasury Bills makes more sense when the rates are rising as a result of falling oil prices, just like we saw in 2017.
If you have questions, feel free to share your comments below: