THERE are expectations that interbank rates will move in mixed directions amid marginal inflow of N30 billion matured Open Market Operation (OMO) bills.
Also, dealers expect local Over the Counter (OTC) bond prices to increase (and yields to moderate) as long term yields remain relatively attractive amid declining yields in the money market.
Meanwhile, the Central Bank of Nigeria (CBN) seeks to raise a sum of N722.17 billion in cash through the issuance of treasury bills in the third quarter of 2021.
The apex bank made this known through its treasury bill programme for Q3 2021, between June and August 2021.
According to the disclosure, a sum of N41.36 billion will be issued for the 91-day maturity period, N151.13 billion for the 182 days, while N529.68 billion for the 364 days maturity period, summing up to a total of N722.17 billion.
The report also shows that the offer amounts are subject to further changes at short notice and one unit of Nigerian Treasury Bills amounts to N1,000.
It is worth noting that the CBN sells treasury bills on a bi-weekly basis to investors and is one of the safest investments available. Interests are paid upfront and the principal paid in full upon maturity. This is a safe haven for passive investors who are looking to make additional income but with a very low-risk appetite.
Notably, since the beginning of the year, most of the known forms of investments in the country have been relatively volatile in terms of performance, with the stock market at a year-to-date decline, mutual funds also not at their best.
Basically, when the government is going to the financial market to raise money, it can do it by issuing two types of debt instruments – treasury bills and government bonds.
Treasury bills are issued when the government needs money for a shorter period while bonds are issued when it needs debt for longer periods.
Nigerian Treasury bills are mostly sourced from financial institutions and are used as a controlling mechanism to help banks mop up excess liquidity and control the money supply.
Treasury bills have a face value of a certain amount, which is what they are actually worth.
However, they are sold for less. For example, a bill may be worth N100,000, but you would buy it for N96,000. Every bill has a specified maturity date which is when the investor receives the money back.
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