How to invest in treasury bills (T-Bills) in Nigeria

What is a treasury bill?

A Treasury bill (or T-Bill) is a short-term government debt security, which yields no interest. Rather, it is issued at a discount on the redemption price.

Basically, the Federal Government issues treasury bills at discounted prices for maturity periods between 91 and 364 days. At the end the selected maturity period, the government buys the bills back at full price. For example, let’s say you buy a 182-day ₦200,000 treasury bill at a discounted rate of ₦180,000. The Federal Government of Nigeria writes an IOU for ₦200,000 and agrees to pay back in 182 days.  You don’t get any monthly interest payments,  rather you make your money back when the bond is purchased back from you at full price. In this case the T-Bill pays 11% interest rate (₦20,000/₦180,000 = 11%) over the 182-day period.

Screen Shot 2015-10-29 at 15.39.51

You will not get any e-mail alerts of notifications until the end of your tenure, so don’t expect any – just be patient. You only get a debit notification when the money is taken out of your account, and a credit notification when the money is returned at the end of the tenure. If you want proof of your investment, it is best to request this from your bank once the money has left your account. You will need to ask them for a T-bill certificate after payment has been made.

Where can I purchase T-Bills?

T-Bills are sold via commercial banks and official agents such as merchant banks, and sales are open to individuals and corporate investors.

Is there a minimum purchase amount for T-Bills?

It depends on the bank. Some banks offer a minimum of ₦50,000, while some offer a minimum of ₦500,000.

How long can I invest for?

There are 3 tenures available: 91 days, 182 days or 364 days.

How can I buy T-Bills?

First, you will need to complete an application form issued by your bank or an approved discount house such as Kakawa Discount House Ltd. You will need to submit your application early, as most banks are required to submit applications received by the Wednesday before the dates announced by CBN – which you can get on the CBN website or in the dailies. Alternatively,  your bank might be able to provide you with notifications ahead of time.

When completing the application form, you will be requested for a discount rate – which is the percentage by which the face value of the bill is discounted by. Current rates in Nigeria are around the 12% – 14% mark. You can request for this rate to either be set by your bank, or specified by you (under the “stop rate” section of the application form). If you do however choose to specify a rate which is significantly higher than what the CBN is prepared to offer, your bid will fail.

Various banks will offer you various stop rates/discount rates, depending on how much you want to invest and how long you want to invest it for so it is a good idea to shop around and not go with the first offer you receive. Do your research and select a bank carefully as people have reported banks offering as low as a 2.4% discount rate. As at October 2015, unverified informal accounts suggest that Firstbank seems to have the best bid rate for a 91 day tenure at 9.5%.

How do I calculate the return on my investment on T-Bills?

It is very easy to calculate the returns on your investment, and how this is paid. If for example you purchase T-Bills worth ₦100,000 at a 10% discount rate, CBN only debits your account of ₦90,000. At the end of the maturity period, you are paid your face value sum of ₦100,000.

Can I sell my T-bills before it matures?

It is possible to sell your T-Bills before it maturity using the OTC market. Because this is governed by the forces of demand and supply, you might make a loss if you choose to sell them before their maturity date.

How secure are T-Bills?

As T-Bills are based full faith of the Federal Government of Nigeria, they are considered one of the most secure investments to make. They can also be used as collateral, and are accepted by all banks.

96 Comments

  1. Eze frank November 2, 2015
    • mrpepe November 2, 2015
  2. Alec March 25, 2016
  3. Okorhi godswill March 30, 2016
    • Ethan Okoli April 29, 2017
  4. Okorhi godswill March 30, 2016
  5. Tunde April 3, 2016
  6. Adesanya Adebiyi May 30, 2016
    • Ethan Okoli April 29, 2017
  7. Nwadike Kingsley August 6, 2016
  8. Ilesanmi September 4, 2016
    • mrpepe September 5, 2016
  9. Oteta Godwin September 9, 2016
  10. Pam David Dango September 19, 2016
  11. Tony October 1, 2016
  12. Ndolo onyedikachi October 7, 2016
    • Ethan Okoli April 29, 2017
  13. Rose November 6, 2016
  14. Adibuah January 3, 2017
  15. Phranklyn January 6, 2017
    • Ethan Okoli January 7, 2017
    • Ethan Okoli April 29, 2017
  16. david January 14, 2017
  17. Ejeh Michael January 16, 2017
    • Ethan Okoli April 29, 2017
  18. JOE February 3, 2017
    • Ethan Okoli February 11, 2017
  19. JOE February 3, 2017
  20. Tony March 5, 2017
  21. Tony March 5, 2017
  22. Lola March 19, 2017
  23. Romanus Agabi April 7, 2017
    • Ethan Okoli April 14, 2017
  24. Blessing Anyanwu April 13, 2017
  25. Blessing Anyanwu April 18, 2017
  26. Ddjames April 26, 2017
  27. Gbenga May 28, 2017
  28. Tobenna Emechebe June 9, 2017
  29. Leo June 11, 2017
  30. Stanley June 13, 2017
  31. Tayo June 14, 2017
  32. adams July 27, 2017
    • Ethan July 27, 2017
  33. Ikonna August 3, 2017
  34. Gift August 3, 2017
  35. Inno August 26, 2017
    • Ethan August 28, 2017
  36. Ujunwa August 31, 2017
  37. Suleiman Bunyamin Aminu September 5, 2017
  38. Doris September 6, 2017
  39. Doris September 6, 2017
  40. RAZA October 3, 2017
  41. Stanley November 20, 2017
  42. Adekunle Adebola November 30, 2017
  43. Rabiu December 3, 2017
  44. George December 4, 2017
  45. George December 4, 2017
  46. Damian December 5, 2017
  47. Eniola December 5, 2017
  48. Ekpez December 8, 2017
  49. Ekpez December 16, 2017
  50. Sophie B February 2, 2018
  51. Jide Egbeyemi February 27, 2018
    • Ethan February 27, 2018
  52. diran emanuel March 1, 2018
  53. Victoria oluwasesan March 3, 2018
  54. chukwudi March 6, 2018
    • Ethan March 8, 2018
  55. Joseph ifeanyi March 15, 2018
  56. Duru Nicodemus April 29, 2018
  57. Ani J.O. June 6, 2018
  58. Dorcas July 4, 2018
  59. Annonymous July 8, 2018
  60. Dan December 31, 2018
  61. Max January 31, 2019
  62. Tochi April 17, 2019
  63. Chiamaka Maxwell June 21, 2019
  64. David July 15, 2019
  65. edevbankhiota July 20, 2019
  66. samson July 20, 2019
  67. Son of God August 4, 2019
  68. joy August 10, 2019
  69. Sopuruchi P August 16, 2019
  70. ODE J. September 17, 2019
  71. Praise idiake September 23, 2019
  72. Ajayi Michael October 16, 2019
  73. Nwosu October 18, 2019
  74. Comfort Dauda Iliya October 20, 2019
  75. Isaac November 22, 2019
  76. Leke December 21, 2019

Leave a Reply