T-Bills are issued for a specific period usually 91-day (3 months), 182-day (6 months) and 364-day (one year) tenors in the primary market. The rates on T-Bills are quoted annually; as a result, an investor gets the full rate only if the tenor is up to 364 days. For instance, if the rate on a 182-day T-bills is quoted at 1 0%, the investor effectively gets 5%. However, in the secondary market, T-Bills can be bought at irregular tenors ranging from 1-363 days.
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Treasury Bills (T-Bills) are short-term debt instruments issued by the Federal Government of any country through its Central Bank to raise short-term funds from the public (private individuals, institutional investors, non-governmental organisations, ...
Q: How do Treasury Bills work?
T-Bills are discount instruments, and they are so called because the investor gets its interest upfront. This means that the interest promised on a T-bill instrument is payable on the very day the investment commences. For instance, if a T-bill ...
Q: Primary and Secondary Market for Treasury Bills
A T-Bill can be purchased either in a primary or secondary market. The primary market is when the investor buys directly from the CBN through a public auction carried out every fortnight while in the secondary market, an investor buys from an ...
Q: What are the other benefits of Treasury Bills?
It is a risk-free investment as it carries the guarantee of the Federal Government of Nigeria T-Bills are highly liquid instruments and can be used as collateral Liquidity-active secondary market for ease of entry and exit (though at a cost) Interest ...
Q: What do I benefit from investing in Treasury Bills?
Treasury bills in Nigeria are guaranteed by the full faith of the Federal Government; hence there is no default, if the government cannot pay, the CBN can print money to settle all investors. Treasury bills are fixed-income investments and income ...