Treasury Bills
Treasury bills or T-Bills as they are sometimes called are short-term debt securities issued by the government to make up for budget deficit and fund projects
In Nigeria, T-Bills are issued by the Central Bank of Nigeria (CBN) on behalf of the federal government. The investment is backed by the full faith and credit of the Federal Government of Nigeria (FGN), hence, it is considered one of the safest forms of investment.
How does this work?
The government issues T-Bills at discounted rate and pays the interest upfront while the investment sum is repaid at maturity. So, if you were to invest ₦100,000 in T- Bills at a discounted rate of 10%, you will be debited ₦90,000 only. This means that your interest is paid to you immediately your investment subscription is processed. At maturity, ₦100,000 is credited to your account at face value, that is, at the actual value of the T-Bills. Basically, you purchase T-Bills at a discount and are paid your interest upfront.
Some of the benefits
Safe
T-Bills is one of the safest investment options as they are backed by the full faith and credit of the government and are considered risk-free.
Easy divestment
If you wish to terminate your T-Bills investment before maturity, you can easily do so as T-Bills are traded in the secondary market so you can easily access your funds.
Predictable returns
At the time of investment, you know exactly how much you would receive which makes T-Bills a transparent investment option.
Flexible tenor
Being short-term investments, T-Bills allow investors to choose investment tenors or 91, 182 or 394 days depending on their risk appetite and preference.
Where can I buy Treasury Bills?
- The first method is through a primary market. Here, investors buy T-Bills directly from the CBN and the minimum investment amount is ₦50,001,000. Also, primary market buyers can only buy T-Bills when there is a new issue from the government and the tenor is often longer which also translates to higher interest rates. The Primary Market Auction is held every two (2) weeks on Wednesdays except as advised otherwise by the CBN. There is also the secondary market which opens every Monday to Friday (10am – 4pm).
- The second way to trade T-bills is by buying through the secondary market. In this case, investors can only purchase issues through authorised dealers like banks, stockbrokers and discount houses. Stanbic IBTC Stockbrokers is an authorised dealer of T-Bills in Nigeria. In the secondary market, investors can trade previously issued T-bills, that is, they can buy or sell-off already issued T-bills. However, the investment tenor is shorter than in the primary market which translates to lower interest rates as well. The minimum investment amount is ₦100,000 and in multiples of ₦10,000 thereafter.
Tenor of T-Bills:
- Short term – less than 90 days ·
- Medium term - 91 days to 180 days ·
- Long term - 181 days to 364 days
How to get it
You can apply for T-Bills through the primary or secondary market:
-
Primary Market Auction : Kindly download and complete the Treasury Bills Auction Bid Form. The T-Bill form is only applicable for primary market auctions.
-
Secondary Market : Send a letter of instruction to your relationship manager with [email protected] in copy, stating your intention to purchase Treasury Bills from Stanbic IBTC Bank. The letter should include:
-
The investment amount or the face value of the security to be purchased.
-
Your preferred investment tenor for the security.
-
Ensure your Stanbic IBTC Bank account is funded with the investment value before submitting your request.
What it costs for customers to sign up
-
Transaction fee – ₦300
-
VAT on transaction fee – 7.5% of the transaction fee
-
Custody fees – 0.05% of the face value
-
VAT on custody fees – 7.5% of custody fees
-
Commission: Flat fee of N100 (for primary market auctions only)
-
VAT on Commission: 7.50% on Commission (for primary market auctions only)
For more details on Treasury Bills, download the Treasury Bills FAQ document.
-
Where can I buy Treasury Bills?
-
How to get it
-
What it costs for customers to sign up
- The first method is through a primary market. Here, investors buy T-Bills directly from the CBN and the minimum investment amount is ₦50,001,000. Also, primary market buyers can only buy T-Bills when there is a new issue from the government and the tenor is often longer which also translates to higher interest rates. The Primary Market Auction is held every two (2) weeks on Wednesdays except as advised otherwise by the CBN. There is also the secondary market which opens every Monday to Friday (10am – 4pm).
- The second way to trade T-bills is by buying through the secondary market. In this case, investors can only purchase issues through authorised dealers like banks, stockbrokers and discount houses. Stanbic IBTC Stockbrokers is an authorised dealer of T-Bills in Nigeria. In the secondary market, investors can trade previously issued T-bills, that is, they can buy or sell-off already issued T-bills. However, the investment tenor is shorter than in the primary market which translates to lower interest rates as well. The minimum investment amount is ₦100,000 and in multiples of ₦10,000 thereafter.
Tenor of T-Bills:
- Short term – less than 90 days ·
- Medium term - 91 days to 180 days ·
- Long term - 181 days to 364 days
You can apply for T-Bills through the primary or secondary market:
-
Primary Market Auction : Kindly download and complete the Treasury Bills Auction Bid Form. The T-Bill form is only applicable for primary market auctions.
-
Secondary Market : Send a letter of instruction to your relationship manager with [email protected] in copy, stating your intention to purchase Treasury Bills from Stanbic IBTC Bank. The letter should include:
-
The investment amount or the face value of the security to be purchased.
-
Your preferred investment tenor for the security.
-
Ensure your Stanbic IBTC Bank account is funded with the investment value before submitting your request.
-
Transaction fee – ₦300
-
VAT on transaction fee – 7.5% of the transaction fee
-
Custody fees – 0.05% of the face value
-
VAT on custody fees – 7.5% of custody fees
-
Commission: Flat fee of N100 (for primary market auctions only)
-
VAT on Commission: 7.50% on Commission (for primary market auctions only)
For more details on Treasury Bills, download the Treasury Bills FAQ document.
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