Treasury Bills, also known as T-Bills, are short-term government-backed securities issued by the CBN. They are issued when the government requires a short-term loan of funds. They can reach maturity in 364 days. T-Bills are sold at a price lower than their face value.
How Treasury Bills Work
The CBN sells Treasury Bills in a biweekly auction. Buyers submit bids, and the average lowest bid is chosen. The government sells these bills at a discount (lower than face value). The investor then holds the T-Bills until the maturity date and is eventually paid the face-value.
Here’s a typical example to understand how T-bills work.
The CBN sells a T-bill for N200,000. FGN issues the T-bills at N180,000 (i.e., at 10% discount rate). Tunde, an investor pays 180,000 to buy the T-Bill. At maturity, he will be paid the face value of N200,000. The N20,000 will be Tunde’s profit.
How Can I purchase Treasury Bills in Nigeria?
The minimum amount you can invest in T-bills is $50 million and this can be purchased from licensed dealers or brokers such as Parthian Partners. If you do not have that much money, you can invest with some commercial banks for as little as N100,000. Alternatively, you can buy small volumes of T-bills (from N10,000) on the i-invest mobile app.
Is it possible to sell treasury bills before they mature?
Yes. Treasury Bills can be sold before maturity on the OTC market. Parthian Partners buy and sell large volumes of securities such as T-bills, bonds, and commercial papers on the OTC market.
Disclaimer: This content is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Talk to a financial expert before you make an investment move.
There are risks associated with investing in securities. Investing in stocks, bonds, exchange-traded funds, mutual funds, and money market funds involves the risk of loss. Loss of principal is possible.