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Nairaland Forum / Nairaland / General / Investment / Treasury Bills In Nigeria (4625498 Views)
Fixed Deposits Or Treasury Bills, Which Is Better? / Fixed Deposit And Treasury Bill Investments From Abroad / I Need Information On Treasury Bills In Nigeria (2) (3) (4)
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Re: Treasury Bills In Nigeria by ghettodreamz(m): 9:23am On Jul 29, 2015 |
@All Did anyone purchase Tbills during the last auction from FirstBank? I just got off the phone line while I was being told there is not going to be any auction this week until next. Meanwhile, she suggested I include my bidding rate in the request letter. It got me wondering if FirstBank has started allowing their customers to bid or choose their own stop rate contrary to the conventional way of customers going with the bank successful bidding rate. Please, does anyone has info regarding this? I was surprised hearing that from the lady I spoke with, or maybe it's just a mistake on her part. |
Re: Treasury Bills In Nigeria by yomi007k(m): 12:31pm On Jul 29, 2015 |
ghettodreamz:Pls bro confirm oo. So that I can come join FBN. Acess bank is ripping my *** out. I beg |
Re: Treasury Bills In Nigeria by topendo(m): 4:24pm On Jul 29, 2015 |
BRO, PLS SAY SMTHG... INFORMATION IS KEY... THANKS ANYWAY.. THKS DEBYDEE FOR THE DISCUSS ON BBM....... |
Re: Treasury Bills In Nigeria by egopersonified(f): 7:55pm On Jul 30, 2015 |
Can someone explain the procedure to terminate treasury bills before the due date? And how much should I be looking at losing if I bought 400k worth for 182 days at 13%. |
Re: Treasury Bills In Nigeria by angelo82: 6:11pm On Jul 31, 2015 |
Anyone who has ever used STANBIC IBTC should please give details about their professionalism,ethics and other necessary info that can uphold their integrity..................... |
Re: Treasury Bills In Nigeria by Caracta(f): 8:50pm On Jul 31, 2015 |
egopersonified: Write a letter and give at least two weeks notice. You'd lose 20% of interest accrued. If you remember the interest paid upfront, calculate 20% of it. That amount would be deducted from your principal. Do you understand? |
Re: Treasury Bills In Nigeria by Nobody: 9:11pm On Jul 31, 2015 |
Caracta: This is totally wrong, TBill interest is not paid upfront but at maturity that is why it is issued at a discount You are not supposed to be penalized because it is a tradable security . I can tell you more but later |
Re: Treasury Bills In Nigeria by Caracta(f): 9:40pm On Jul 31, 2015 |
NairaQuest: Dude, you don't need to tell me more. Thanks for the offer. You can't be more catholic than the Pope. I do this everyday. 5 Likes |
Re: Treasury Bills In Nigeria by billtommy(m): 10:34am On Aug 01, 2015 |
Caracta: I'm not disputing this, I just need some clarifications, are you saying that the number of days the money had spent in "wherever" won't be taken into consideration? Cos if its like you stated, it means the buyer still gains 80% of his acrude interest after termination, whereas, I think he should loose instead. Or the 20% of his interest will be deducted from his total capital, hereby forfeiting the entire interest that was paid upfront? |
Re: Treasury Bills In Nigeria by angelo82: 11:17am On Aug 01, 2015 |
billtommy: The yield of the remaining tenure will be completely deducted from your principal amount......I repeat there is no 20% penalty charge..........I am speaking from experience............. |
Re: Treasury Bills In Nigeria by Caracta(f): 11:36am On Aug 01, 2015 |
billtommy: Of course the remaining dates would be taken into consideration. It would be prorated. You can't earn interest on days your money wasn't in use. |
Re: Treasury Bills In Nigeria by Marpol: 12:37pm On Aug 02, 2015 |
Pls house when is the next bidding date. |
Re: Treasury Bills In Nigeria by manie(m): 1:35pm On Aug 02, 2015 |
NairaQuest: Treasury Bill interest is paid upfront. if yours is not paid upfront you need to change your banker. 2 Likes |
Re: Treasury Bills In Nigeria by egopersonified(f): 9:31pm On Aug 02, 2015 |
Thank you all for your replies |
Re: Treasury Bills In Nigeria by ghettodreamz(m): 7:57am On Aug 03, 2015 |
Re: Treasury Bills In Nigeria by maebem: 10:03am On Aug 03, 2015 |
Elai147: |
Re: Treasury Bills In Nigeria by berexio1: 11:31am On Aug 03, 2015 |
NairaQuest:Your first line is totally wrong. And you wanna teach somebody about TBills? #SingingteacherNoteachMeNonsense 2 Likes |
Re: Treasury Bills In Nigeria by berexio1: 11:35am On Aug 03, 2015 |
angelo82:Stanbic is very okay in my opinion. 1 Like |
Re: Treasury Bills In Nigeria by Marpol: 11:40am On Aug 03, 2015 |
ghettodreamz: Thanks man 1 Like |
Re: Treasury Bills In Nigeria by Nobody: 6:59pm On Aug 03, 2015 |
berexio1: If that is how you guys treat it in Nigeria, then you are not following international Accounting Standards. Treasury bills are issued at discount and redeemed at par. This means that if you buy a 100,000 TBill with a yield of 10%, you will pay 90,000 on settlement day but on maturity you will receive 100,000 That does not constitute up front interest payment. According to International Accounting Standards Board, the IFRS treatment is that you Debit Investment Account with 90,000 and credit Cash with 90,000 when you purchase the TBill but on maturity you credit Investment Account with 90,000, credit Interest Income with 10,000 and Debit cash with 100,000. This means that interest on a TBill is reported when sold or at maturity whichever comes first but not on an accrual basis. If this is not what is done in Nigeria, then ICAN needs to change the accounting principles 5 Likes |
Re: Treasury Bills In Nigeria by Seun(m): 10:07pm On Aug 03, 2015 |
Auction this week? |
Re: Treasury Bills In Nigeria by angelo82: 10:11pm On Aug 03, 2015 |
5th Of August............... |
Re: Treasury Bills In Nigeria by samkay12(m): 1:11am On Aug 04, 2015 |
@NairaQuest All you have said in layman's terms is that Interest is obtained upfront My account is debited 90k for a 100k TB investment; I get 100k after 1 year but I can spend the 10k immediately not waiting 1 year; I don't need to speak Accounting to see that I have access to my supposed 10k interest at the beginning of my tenor; Only caveat is that there still needs to be 100k in the cash account instead of 90k when it is being debited initially (or in your accounting-speak being credited) NairaQuest: 3 Likes |
Re: Treasury Bills In Nigeria by berexio1: 2:09am On Aug 04, 2015 |
@nairaquest..Our terminologies might be wrong according to ur explanation of the mode of operation of TBills.But what we are trying to say is that u have acess to the full interest accrued to u when u start the investment provided u let it run for the duration u chose unlike other investments where u get the interest prorated and u still get all+principal at the end of the tenure eg fixed deposit |
Re: Treasury Bills In Nigeria by Nobody: 2:40am On Aug 04, 2015 |
berexio1: Thank you for your response, I think there is a general misconception within the Nigerian Investment community about the interest on TBills. The interest on Tbills is the difference between the discounted price you paid when you buy it and full principal you received when it matures, if you hold it to maturity, or the value you realized if you sell it before maturity. I have read many articles both in the Nigerian media and on forums alluding that TBill interests are paid upfront. I think that this is a misconception. In essence a TBill is nothing but an IOU issued by a government. It is not too different from the IOU that a friend issues to you as a contractual acknowledgement of debt, the only difference is that TBill is backed by the credibility of the government, which makes it seemingly risk free. Now, let us assume that a friend tesll you to lend him N50,000 and after 182 days he will pay you back N55,000, will you say that you received N5,000 interest upfront? In the same way, when you buy a N100,000 worth of TBill from the government by paying N90,000 because the yield is 10%, you are lending N90,000 to the government for 182 days or as the case may be and the government will pay you back N100,000, just like your friend would do. The only scenario that will amount to upfront interest is if the government credits your account via your bank with N10,000 when you buy the TBill and pays you N90,000 on the maturity date. If you say that you received N10,000 upfront, and the government pays you back the full N100,000 on maturity, then you would have received N20,000 on N90,000 investment. When looking at TBills, like any other investment (except such derivatives like futures, swaps or forwards which do not involve initial cash flows), you should look at the cash flow. In the case above, the initial cash outflow is N90,000 while the inflow at maturity is N100,000 making the interest N10,000 receivable at maturity. In terms of access to interest, you have access to the full interest as long as you hold it to maturity, because it paid at maturity but should you decide to sell before maturity, you will either get part of the interest or lose it all or in part depending on the trend of market interest rate because the post issue price of TBill is a function of market rate otherwise called yield. Given the inverse relationship between price and interest rate, if market interest rate rises a great deal, the TB price may reduce so much such that you sell below the value you bought it thereby losing out on the interest for the period you have held it. The reverse will be the case in a situation of falling interest rate. Thanks once again for the opportunity to engage in this discussion 2 Likes 1 Share |
Re: Treasury Bills In Nigeria by berexio1: 9:53am On Aug 04, 2015 |
NairaQuest:Nice one. I agree, you really are a subject matter expert on this one!!! |
Re: Treasury Bills In Nigeria by yemmit90: 11:36am On Aug 04, 2015 |
NairaQuest: What is the 10% of 90,000 you claimed you lends out? And why do you think the calculation is based on the said 100,000 and not 90,000 that was actually deducted? |
Re: Treasury Bills In Nigeria by yemmit90: 11:52am On Aug 04, 2015 |
berexio1: I dont think is an expert as you said. He negletected the face value of actually investment upon which interest is being calculated and came up with such pseudo analysis. Check again the example he gave concerning borrowing from friend, you will see there is no correlation between what he was saying and TB. 1 Like |
Re: Treasury Bills In Nigeria by Nobody: 12:26pm On Aug 04, 2015 |
yemmit90: You are confusing yield to maturity with discount yield. In TBill, the 10% is the discount yield and that is not your return on the investment if you hold it to maturity, your return, in this case the YTM is the 10, 000 interest divided by the 90,000 you invested, which is 11.11%, that is your actual return. In TB, the principal amout is not what you invested, it is a notional upon which the interest is calculated based on the discount yield and it is what you get paid back. 1 Like |
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