Central Bank of Nigeria to raise N1tn from treasury bills

, Magazine

A total of N1.006 trillion will be raised by the Central Bank of Nigeria (CBN) through the issuance of treasury bills in the second quarter of 2019.

This information is contained in the Nigerian Treasury Bills Issue Programme, which was published yesterday on the CBN website.

According to the breakdown of the issuance calendar, a total of N503.16 billion will be raised from rollover programmes with a maturity period ranging from one to three years.

Understanding Treasury Bills

The Central Bank of Nigeria periodically sells treasury bills in efforts to raise capital for the Federal Government. The issuance of treasury bills is also used as a mechanism to control to circulation of capital in the economy.

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 N10,000, but you would buy it for N9,600. Every bill has a specified maturity date which is when you receive money back.

The government then pays you the full price of the bill (in this case N10,000), giving you the opportunity to earn N400 from your investment. The amount that you earn is considered as the interest, or your payment for lending your money to the Government. The difference between the value of the bill and the amount you pay for it is called the discount rate and is set as a percentage.

Treasury bills are mostly sourced from financial institutions. Once again, the bank issues treasury bills regularly as a control measure to help banks mop up excess liquidity and control the money supply.

Treasury bills are some of the many investment options available to the Nigerians  investing public. Therefore, you should probably consider taking advantage of it, first by studying the CBN issue calendar.