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Nairaland Forum / Nairaland / General / Business / CBN Crashes Treasury Bills Rates To Single Digits (33018 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 EgunMogaji2: 11:29am On Nov 14, 2019 |
somehow: For me, yes. It's actually very brilliant. 1 Like |
Re: CBN Crashes Treasury Bills Rates To Single Digits by somehow: 11:36am On Nov 14, 2019 |
EgunMogaji2: About 5 years ago, I saw the option of taking profit at maturity or from the start, hence the question. 1 Like |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Nobody: 11:39am On Nov 14, 2019 |
This is not a good news at all. A certain small million wey suppose dey bring in Consistent 12.5 percent for payment of certain bills will now be just a paltry 8 percent? |
Re: CBN Crashes Treasury Bills Rates To Single Digits by EgunMogaji2: 11:39am On Nov 14, 2019 |
GAZZUZZ: Bad news for retirees like me who banked on the higher rates. This is still within budgeted range though. It could be good news if market price of things that we buy adjusts, but we know it won't. Example, let's say you were charging N25K for oil changes because clients could afford it. You won't necessarily reduce it to N20K because your clients are earning less now. If Nigeria keeps screwing around, then I'll just move my investment back to the US. Shikena. Or I'll process Canada visa 1 Like |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Kolping: 11:47am On Nov 14, 2019 |
FGN Savings Bond https://www.nairaland.com/3658395/fgn-savings-bond https://www.dmo.gov.ng/fgn-bonds/savings-bond prof2007: |
Re: CBN Crashes Treasury Bills Rates To Single Digits by urahara(m): 11:47am On Nov 14, 2019 |
Lukmanraji: Wow , but since the govt will pay them back their money later , won't that still bring back that same liquidity that the govt is trying to mop up ? 1 Like |
Re: CBN Crashes Treasury Bills Rates To Single Digits by studentofTruth: 11:57am On Nov 14, 2019 |
ntyce: With borders closed, increased taxation, and staple commodity prices on the rise (rising inflation)? I doubt that bro! A raise is more likely than a slash. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by studentofTruth: 12:00pm On Nov 14, 2019 |
chloride6: I hear you. In as much as TB rate reduction may increase bank deposits, banks will never lower their rates if inflation is on the rise! |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Abbeyme: 12:01pm On Nov 14, 2019 |
VicThory: Good for borrowers, not too good for investors. Good for businesses and the economy, bad for high earners that’ll rather save for the rainy days. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by chloride6: 12:03pm On Nov 14, 2019 |
studentofTruth: What are you talking about? Rate are determined by supply and demand and have nothing to do with inflation... The primary factors affecting interest rate are deferred consumption, credit ratings and liquidity... |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Pesuzok(m): 12:05pm On Nov 14, 2019 |
FindingNigeria:And you think mutual funds won't drop? |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Lukmanraji(m): 12:13pm On Nov 14, 2019 |
DenreleDave: Nothing I'll like to know. Anyways, am a Final Year Banking and Finance Student from Lagos State University. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Brighzee124: 12:17pm On Nov 14, 2019 |
Meh, this hard ooo |
Re: CBN Crashes Treasury Bills Rates To Single Digits by studentofTruth: 12:21pm On Nov 14, 2019 |
chloride6: Son, no bank will lend businesses money at a rate below inflation rate, unless it's a government-subsidized loan scheme! This has nothing to do with text books. 1 Like 1 Share |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Lukmanraji(m): 12:21pm On Nov 14, 2019 |
urahara: That's another Monetary Policy called Expansionary Monetary Policy. When the government pays back their capital and interest on maturity, the government is technically buying back from the investors. Which means, when the government buys, he pays the seller. The amount paid to the investor is a means of increasing the flow of credit or liquidity in the economy in order to get the economy running. This policy is used to fight an economy situation such as recession. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by studentofTruth: 12:31pm On Nov 14, 2019 |
Lukmanraji: Sure, aka quantitative easing. ECB is still on it! |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Dereformer(m): 12:51pm On Nov 14, 2019 |
I have gone through the whole analysis in this thread, and i must say that few who commented here have shown a good grasp of the subject matter. There is no developed economy in the world where government TB yields as much as 10%. No economy grows with a high yielding government securities. This is because high yield TBs are counter productive in themselves. Why will I invest in a very risky business that will give me, say 16%, when i have a risk free investment yielding 11%? Do you get the drift. I can borrow #5,000,000.00 from my company cooperative at 5% per annum and invest same in TB at say, 11.5%. This means, in a year, I will make #325,000.00 (#575,000.00 - #250,000.00) without doing anything. This is financial arbitrage. Thus, there will be no incentive for me to take risk by venturing into the real sector. This is just in summary why high yielding TB is bad for the economy. It could be much more than this. 6 Likes 2 Shares |
Re: CBN Crashes Treasury Bills Rates To Single Digits by chloride6: 1:00pm On Nov 14, 2019 |
studentofTruth: One I am not your Son, 2. Your Lending rates are determined by a host of factors eg risk tiering, prevalent t Bill's rate.Banks dont care about inflation..Because inflation doesnt affect profit.. Factors that affect profit include the Weighted Average Cost of Capital (WACC) of the bank..The bank will first attempt to fill in the best risk adjusted assets eg Tbills and bonds up to the regulatory cap and liquidity requirements, and then deploy the rest of their assets to credit facilities.. Even if inflation is 100%, provided the banks is borrowing funds at a WACC of 3% and is giving loans at a risk adjusted rate of 4%, the bank is fine because the bank is making money. The only way to avoid inflation is to buy TIPS or abandon the currency all together.. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by 989900: 1:05pm On Nov 14, 2019 |
It was inevitable. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Awoo88: 1:05pm On Nov 14, 2019 |
ntyce:What is good about what you just read?? Do you understand the meaning of what you just read? Or you are one of those zombified monikers who see everything good with this government 2 Likes |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Dereformer(m): 1:13pm On Nov 14, 2019 |
I want 200 persons ( including myself) in this forum who can contribute #5,000,000.00 each, so that we go into business of manufacturing. None of the 200 persons will be involved i n the management of the business. We will, through a good professional firm, engage good hands to run the firm. But we will be involved in the decision making process directly or by proxy. If you interested just indicate by quoting and typing I am in. As soon as we have the required number, we will arrange for a meeting in any location agreed by all in Lagos. This is a modification of crowdfunding which obtains in developed climes. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by DenreleDave(m): 2:00pm On Nov 14, 2019 |
Lukmanraji: Really, meaning u going for service in February first batch too Abi |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Fuckgovt: 2:01pm On Nov 14, 2019 |
ntyce:I guess u don't do financial investments. Guy its bad news for we who have invested in bills. Pmb is just worse than the devil himself |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Clementz0(m): 2:02pm On Nov 14, 2019 |
CBN as reduced the interest rate on treasury bills when it's the safest investment that guarantees your interest and deposited money even at times up front payment of interest nawa oooo...9ja which way |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Nobody: 2:12pm On Nov 14, 2019 |
Bad news for lazy investors and good news for the real sector and equity market. It may boost demand for the bond market too in the short term, if the apex bank does not reduce the yields. Meanwhile, the cheapest stock to buy now is Zenith bank with the highest dividend yield. 1 Like |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Nobody: 2:18pm On Nov 14, 2019 |
Fuckgovt: Guy, 'have' is different from 'will'. Your return remains intact. |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Canada4sure: 2:25pm On Nov 14, 2019 |
So which other investment option do we have? |
Re: CBN Crashes Treasury Bills Rates To Single Digits by gabicon: 2:47pm On Nov 14, 2019 |
ursullalinda: It's good for the economy, the average profit margins on businesses is around 17%, combined with all business risk. The government has been selling treasury bills at 12-14% interest rate. Treasury bill is a low risk investment, as long as the country is not destroyed an investor will always get his money with interests back. Now, it makes more economic sense to buy treasury bills with a profit of 14% guaranteed than to use my capital to build a factory with a possibility of 17% plus much risk (I may not even get 2% depending on how the risk play out) Lowering interest rate to single digit will force an investor who wants more money to produce goods and services. 2 Likes 1 Share |
Re: CBN Crashes Treasury Bills Rates To Single Digits by Lukmanraji(m): 2:53pm On Nov 14, 2019 |
DenreleDave: Hopefully cos our exam is coming up next month |
Re: CBN Crashes Treasury Bills Rates To Single Digits by ntyce(m): 3:18pm On Nov 14, 2019 |
Fuckgovt: Awoo88: Go back to economics 101 to understand why Tbills should pay the lowest in investments |
Re: CBN Crashes Treasury Bills Rates To Single Digits by yetunsbay(m): 3:19pm On Nov 14, 2019 |
omerukokwuru:how is an investor loosing money ? I think its rather appropriate saying u get to assume a lower rate of returns IF u deem investing. Meanwhile, your initial capital outflow still safe |
Re: CBN Crashes Treasury Bills Rates To Single Digits by yetunsbay(m): 3:25pm On Nov 14, 2019 |
somehow:Yes, that has ever been TB doctrine |
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