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Nairaland Forum / Nairaland / General / Business / CBN Crashes Treasury Bills Rates To Single Digits (33049 Views)
CBN Suspends COVID-Linked Loan Relief And Raises Interest Rates To 9% / Banks Raise Lending Rates To 30 Per Cent / CBN To Sell N252bn Treasury Bills Next Week (2) (3) (4)
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Re: CBN Crashes Treasury Bills Rates To Single Digits by chloride6: 8:08am On Nov 14, 2019 |
VicThory: The benchmark cost of borrowing money has reduced... So answer yourself is this good.. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by urahara(m): 8:08am On Nov 14, 2019 |
Leadafrica: Higher demand on treasury bills , causes interest rate to fall. 2 Likes |
Re: CBN Crashes Treasury Bills Rates To Single Digits by mekaboy(m): 8:09am On Nov 14, 2019 |
Bad news. They borrow and loot from outside, they don't want Nigerians to enjoy good interests when they lend to Nigeria. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Nobody: 8:09am On Nov 14, 2019 |
izzou: In layman’s English treasury bills are a system where you lend money to the government. Can be for 3, 6 9 or 12 months Say I lend fg 10 million for 12 months at 10%.Fg will give me 1 million at the point of my lending them the money. At the end of 12 months, they give me my money back. I can repeat cycle, or decide to do something else with the money. Treasury bills are a very safe form of investment, so everyone is jumping on them. There are typically auctions where people bid for treasury bills every two weeks As demand is getting higher, it seems cbn is dropping the rates, which means rather than 1 million for 10 million, I would get 898000 That’s it in very simple terms You are actually better off asking poco. 10 Likes |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Reference(m): 8:09am On Nov 14, 2019 |
Pistotita: Eh now, because inflation there is low. You give money to government for a year, collect it back with the so called yield and it cannot purchase what it could a year ago. If government was really investing in the articles to drive down the cost of living and cost of doing business then the long term prospects will be better but government remains the most wasteful and inefficient consumer of resources so poverty persists all round. 4 Likes |
Re: CBN Crashes Treasury Bills Rates To Single Digits by urahara(m): 8:11am On Nov 14, 2019 |
rastamouse: When you buy t- bills at a specific interest rate , aren't they supposed to give you your money at that same rate irregardless of whether later on the interest rate changes. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Archmage(m): 8:12am On Nov 14, 2019 |
statusquoante:Fixed deposit will surely give you lower than Treasury Bills 1 Like |
Re: CBN Crashes Treasury Bills Rates To Single Digits by urahara(m): 8:13am On Nov 14, 2019 |
rastamouse: Will this cause the interest rate for fixed deposit accounts to increase ? |
Re: CBN Crashes Treasury Bills Rates To Single Digits by stormborn28(m): 8:13am On Nov 14, 2019 |
Okokobiokor |
Re: CBN Crashes Treasury Bills Rates To Single Digits by omerukokwuru(m): 8:14am On Nov 14, 2019 |
KingAzari:This means that the interest you will get at the maturity of the Tbills will be below inflation rate so right from on set you are loosing money. 5 Likes 1 Share |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Acidosis(m): 8:14am On Nov 14, 2019 |
Bad news for investors. Good news for Nigeria. Now Nigerians can pump their funds into the real sector economy. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by urahara(m): 8:16am On Nov 14, 2019 |
Pistotita: U.s treasury bonds are merely 1 percent |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Lush100(m): 8:18am On Nov 14, 2019 |
The news (being good or bad ) depends on the financial dynamics of the economy. MPR rate( moneytary policy rate ) is usually the guide or benchmark that determines general lending rate. If I can recall "rightly" MPR has been on 13.5% since around Sept. meaning savings account rate is 4.05%. I see an imbalance here cos T-BILL rate has gone as low as 7-10% while MPR rate is still at 13.5% meaning that despite this reduction banks are not going to reduce lending rate to customers which hovers around 32-43%. Direct investment will be less attractive meaning FDI will reduce . local businesses will not enjoy the rate "crash". meaning govt will eventually have less money gained from FDI and general business transaction.. A lot of financial houses including insurance, pension houses ,brokers will reduce their profit outlook as they will make less monies. Slightly more money will be in circulation and businesses will still be hard -pressed because lending rate is still high while inflation will pick up. however because December period is usually an all time season-high for consumer spending effect of these above will only start to manifest in mid-January and early February things might be very tight in the business sector but equities in businesses will increases since gains from investment is low. The govt can ease the tight business environment expected to follow by opening borders or allowing a simpler and quicker process for clearing goods at the port to allow for increased business traffic in the sea port to placate whatever negative effect land border closure might have on business and make cross-border transaction shift to import/export by sea. Those with personal assets (non-borrowing) also called equities for businesses will be the In all, this decision or scenario seems temporary unless CBN intends to reduce MPR rate early next year then we will get the true picture of the direction of CBN/Govt my 2kobo lay man analysis (for those that need some explanation) cc: chloride6 VicThory KingAzari izzou Leadafrica 5 Likes 1 Share |
Re: CBN Crashes Treasury Bills Rates To Single Digits by MzTunechi(f): 8:19am On Nov 14, 2019 |
VicThory:bad because the interest rate has dropped |
Re: CBN Crashes Treasury Bills Rates To Single Digits by munaco: 8:20am On Nov 14, 2019 |
Very good means of investing your excess money and you are sure of interest through your bank. A better way of investing if you don't want the stress of street eg MMM and others. Predominant a way of making a rich man rich while the poor remain there because there is no excess money to invest. Also a way govt get money from citizen for immediate expense rather than borrowing. That is my own understanding because in 2001 I invested 500k, for every 90 days roll over, I got btw 25 to 30k. Which I use the proceed then for my flat improve my flat. 3 Likes |
Re: CBN Crashes Treasury Bills Rates To Single Digits by InvertedHammer: 8:20am On Nov 14, 2019 |
/ At these rates, it is still one of the best in the world. / |
Re: CBN Crashes Treasury Bills Rates To Single Digits by MzTunechi(f): 8:20am On Nov 14, 2019 |
urahara:Exactly. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Reference(m): 8:22am On Nov 14, 2019 |
Acidosis: People will only invest in what is profitable. That is low cost, high returns, moderate risk. Can you say that about the real sector right now.? There are serious reasons why folks are in government securities in the first place. If government will not shoot itself in its own feet, that is the safest place to be. 3 Likes |
Re: CBN Crashes Treasury Bills Rates To Single Digits by NonFarmPayrol: 8:22am On Nov 14, 2019 |
Lol Laxy mans investment Let's trade American stocks jare |
Re: CBN Crashes Treasury Bills Rates To Single Digits by statusquoante: 8:23am On Nov 14, 2019 |
Archmage: Can it be lower than 6% ? Unavailability of short tenors like 40 days, 60 days, 70 days etc in the secondary market coupled with the single digit interest rate is currently making treasury bill unattractive. So painful! Just like MMM in 2016, TB has 'crashed' in 2019... |
Re: CBN Crashes Treasury Bills Rates To Single Digits by dante0147: 8:24am On Nov 14, 2019 |
Lol... This is not strange knowing too well that idiot emiefele has bee looking for ways to offset the 500 billion naira they stolen that shaked the hearts of investors ! |
Re: CBN Crashes Treasury Bills Rates To Single Digits by statusquoante: 8:24am On Nov 14, 2019 |
InvertedHammer: Really Tenor is actually the issue. There are no short tenors in the secondary market anymore... |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Nerosoft19(m): 8:24am On Nov 14, 2019 |
ursullalinda:Demand and supply, from the look of things demand has exceed supply that has led to the price (rate) reduction 2 Likes |
Re: CBN Crashes Treasury Bills Rates To Single Digits by koolkamzzy(m): 8:25am On Nov 14, 2019 |
When they stopped individuals and non banking sector from subscribing to the OMO, I knew the TB rate was going to drop. Government want people to invest in the real sector without providing an enabling environment for business to strive, plus multiple taxes eveywhere. Anyways let's see what rate they will publish for the Savings Bond next month |
Re: CBN Crashes Treasury Bills Rates To Single Digits by BlackBaron: 8:28am On Nov 14, 2019 |
Will interest rates also soon go down? Wanted to put some funds on TB but always oversubscribed. Was good while it lasted... 2 Likes |
Re: CBN Crashes Treasury Bills Rates To Single Digits by InvertedHammer: 8:37am On Nov 14, 2019 |
statusquoante:/ Some investments are not for everyone. / |
Re: CBN Crashes Treasury Bills Rates To Single Digits by salt1: 8:38am On Nov 14, 2019 |
urahara: This new rates don't affect previous investments. Let me explain to those asking whether it's good or bad. TB means lending money to government for 90 days, 180 days or 364 days. The interest rates differ. So the longer the loan (tenor), the higher the rate. People have earned 18% on one year TB. With this new policy, they will earn between 7% and 10%. So it's bad for investors, but good for government that will pay cheaper. The interest rate is paid upfront and the main money is paid on maturity. 3 Likes 1 Share |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Acidosis(m): 8:40am On Nov 14, 2019 |
Reference: I'm an advocate of highly secured and risk-free investments like T-Bills but let's face the truth, Nigeria is never going to develop if everyone decides to do nothing but dump their monies in TBills. Banks like Zenith made most of its 2018 profit from TBills. They all don't want to do anything again but lend out money to a corrupt government. To give out loans even became a problem since the yields from a secure investment like TBills outweigh the benefits from loans, bad debts and crazy borrowers. How is that going to help anybody? Btw, let's not forget a basic economic principle that says supply will always be driven by demand. Over the past 5-7 years, the knowledge about TBills have grown so much, leading to a consistent oversubscription. Rates can't continue to rise with that trend. Also note that the real sector economy is not limited to Real Estates. We have others like Agriculture, Education, Etc. We all don't have to do business but we all can invest in businesses via the Equity Market (Shares), crowdfunding, venture capital, etc. TBills may help an individual but it wouldn't change a thing as far as the Nigerian economy is concerned. 9 Likes 1 Share |
Re: CBN Crashes Treasury Bills Rates To Single Digits by tiwiex(m): 8:40am On Nov 14, 2019 |
Leadafrica:Once you invest at a rate, it stays that way. It's to discourage new investors or let them know the song has changed. 2 Likes |
Re: CBN Crashes Treasury Bills Rates To Single Digits by statusquoante: 8:45am On Nov 14, 2019 |
InvertedHammer: True. But it seems 'everyone' are actually not the target of this policy... It's those who should be investing big time in businesses but have decided to be indolent via TB. Maybe CBN should peg principal for TB so that only 'everyone' can partake... |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Angelacruz: 8:47am On Nov 14, 2019 |
Bad VicThory: |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Toseenlove: 8:47am On Nov 14, 2019 |
MohAbdullah: A brilliant "Business Administration or Banking & Finance Student" would decipher such analysis, Not to talk of an economist student. It's too early to start bashing You. I suppose u saw the Oversubscription part. If u understand the Law of Supply and Demand, You would easily decode the analysis. It's not a rocket science!!! 3 Likes |
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