₦airaland Forum

Alikote:
the only time they can use your money as their credit balance is when it matures and is return to your accounts under their leger

example ur tb matured next month then skye bank collapse today it doesnt concern you cbn(liquidator) will ask you to provide new account for onward payment

2 if your tb matures tomorrow and by morning the investment hit your account from their onward the risk is on you not cbn a split second counts if the bank collapse with time difference of one second from credit alert u and your bank carry the risk

3.treasury bill is more than 40 year old no history of default by cbn and Nigeria...even in the 90 with all those wonder banks ..example Savannah bank we where still paid just 7 days late even the 7 days cbn paid interest at market rate

claremont:
Someone who lives in the UK/US and has a good credit profile can make some easy money round-tripping bank loans from UK to Nigeria treasury bills. The average interest rate for a UK bank loan is 4% per year, and from this thread, I can see that the average returns on Nigeria treasury bills is 18%. It takes little or no effort to get a £30,000 loan from a UK bank at 4% APR, and use it to buy Nigerian treasury bills for a 18% return within 6 months. At the end of the 6 months period, pay off the loan. Repeat process as many times as possible.

Nice idea.

deepwater:
Stanbic just responded.
Primary market successful
Submitted late Tuesday after with fears of being too late.

Stsnbic is game, I swear

klas:
These conditions are only applicable if your single TB investment is more than N50m (in which case, you buy in your own name through the bank), otherwise your investment forms a part of the bank's portfolio and the cbn doesn't owe you direct obligation in case of bank collapse.

jp130:
Please any body with other banks hu have gotten alert apart from stanbic?

dotcomnamename:
I invested 5 million Naira in Treasury Bills with First Bank with 177days @ 18% inclusive compounding interest. So I should expect how much interest exclusive my 5 million?

awesomeJ:
The only problem with that is volatility in the FX market, because with just a 10% depreciation in the value of the local currency, you'll suffer a loss. In the six months through November 2016, the naira suffered about 50% depreciation against the greenback at the parallel market moving from about 320 in May to upwards of 480 in November. But thanks to God, this volatility is now being largely contained. So if you don't mind this risk, you're very welcome to purchase our bills, as one of the primary reasons why rates have been kept this high is lure FPIs like you to hold naira assets.
With regards to quoting investment figures, I feel everyone should quote their figures as long as they are OK with it. The forum already makes us anonymous, plus when people quote 100k and 200k nobody says a word.

for this reinvesting upfront interest calculation, you get the value of your returns by using the true yield. if d is the prorated discount rate in %, then %yield y=(100d)/(100-d). so a discount rate of 18.5% has true yield as 1850/81.5=22.7%
so if you invest 1 million together with the upfront, your total returns will be about 227,000 as against 185,000

for 17.5% at 182 days, the prorated discount rate is about 8.75%, so the yield y=875/91.25=9.59 which becomes 19.18% per annum.
Inflation is now at 16.10%, that to us should be significant.

dotcomnamename:
I invested 5 million Naira in Treasury Bills with First Bank with 177days @ 18% inclusive compounding interest. So I should expect how much interest exclusive my 5 million?

Investnow2017:
Thanks so much for your analysis. Please can you break it down more, perhaps in a simpler form.

Santino1:
Pretty simple. As a simple example:

Let's assume you got USD 30,000 as a loan. When you convert it at the current exchange rate of 360 you get 10.8 million naira. You now invest the 11 million in T-Bills at 18%. (0.18*10,800,000) this will give you 12.98 million upon maturity (including your initial capital). Now assume the exchange rate is 500 naira to a dollar at maturity (which was the lowest naira value a while back). Divide 12.74 by 500 and you get about USD 25,500 which means in effect you have lost over USD 4000 due to the fluctuating FX.

This of course a simplified explanation but you get the gist I hope.

Fm4real06:
This is the calculation.
Which fbn branch did u get dat rate?
0.18×5,000,000=900,000
900,000/365days= 2465.7532
2,465.75342×177days
=436,438.35616438
Therefore your interest is 436,438.36 after 177days

Fm4real06:
This is the calculation.
Which fbn branch did u get dat rate?
0.18×5,000,000=900,000
900,000/365days= 2465.7532
2,465.75342×177days
=436,438.35616438
Therefore your interest is 436,438.36 after 177days

mindtricks:
Like seriously, is that how it works even with primary market purchase below 50m?

dotcomnamename:
My branch is in Akure. But 18% of 5m is 900k, isn't?

klas:
With effect from April 1, 2017, the minimum investment in treasury bill is N50m. The minimum was N10,000 before that date but with the introduction of FGN Saving Bond which has the minimum of N10,000, that of TB was jerked up to encourage the patronage of the bond.

If you are investing below N50m in TB, what the banks are effectively doing for you is to pull your own investment into theirs. That is why you cannot get a winning bid rate above that of your bidding bank rate.

klas:
With effect from April 1, 2017, the minimum investment in treasury bill is N50m. The minimum was N10,000 before that date but with the introduction of FGN Saving Bond which has the minimum of N10,000, that of TB was jerked up to encourage the patronage of the bond.

If you are investing below N50m in TB, what the banks are effectively doing for you is to pull your own investment into theirs. That is why you cannot get a winning bid rate above that of your bidding bank rate.

MOM1:
How many days?

dotcomnamename:
177

Investnow2017:
Oh thanks. I mean your computation of True Yield. In a case where you invest in Tbills principal+interest for 364 days. In this case you intend to get the yields at maturoty. How is it computed?

awesomeJ:
for this reinvesting upfront interest calculation, you get the value of your returns by using the true yield. if d is the prorated discount rate in %, then %yield y=(100d)/(100-d). so a discount rate of 18.5% has true yield as 1850/81.5=22.7%

MOM1:
The calculation is right, you can't get 900k on 177 days..

dotcomnamename:
But is 18% of 5m not 900k? Can you explain why i can't get 900k?

Investnow2017:
You invested for only 177 days.

You get N900k if you had invested for 365days which is one year.

So divide the N900k by 365 days making up one year. And times the result with your 177 days to get your actual interest. If you dont work it out like that, following your formula it means if i invest for one day i will get N900k. Because what you simply did was to multiply your 5m by 18%. You did not take into cognizance the number of days you had invested that is why the answer you keep getting is one that makes life seem pretty easy

dotcomnamename:
My branch is in Akure. But 18% of 5m is 900k, isn't?

Fm4real06:
It is! But the 18% is per annum(365 days). You wont get 900k if it is 177days.

awesomeJ:
The only problem with that is volatility in the FX market, because with just a 10% depreciation in the value of the local currency, you'll suffer a loss. In the six months through November 2016, the naira suffered about 50% depreciation against the greenback at the parallel market moving from about 320 in May to upwards of 480 in November. But thanks to God, this volatility is now being largely contained. So if you don't mind this risk, you're very welcome to purchase our bills, as one of the primary reasons why rates have been kept this high is lure FPIs like you to hold naira assets.
With regards to quoting investment figures, I feel everyone should quote their figures as long as they are OK with it. The forum already makes us anonymous, plus when people quote 100k and 200k nobody says a word.

for this reinvesting upfront interest calculation, you get the value of your returns by using the true yield. if d is the prorated discount rate in %, then %yield y=(100d)/(100-d). so a discount rate of 18.5% has true yield as 1850/81.5=22.7%
so if you invest 1 million together with the upfront, your total returns will be about 227,000 as against 185,000

for 17.5% at 182 days, the prorated discount rate is about 8.75%, so the yield y=875/91.25=9.59 which becomes 19.18% per annum.
Inflation is now at 16.10%, that to us should be significant.

chukzyfcbb:
You have spoken well just like your moniker AWESOME j , he he.
We often neglect the true yield in this forum and mention only the discount rate.
Why would one tick receive upfront interest during filling up the tbills form when he or she isn't even planning to use the cash anytime soon.


Nice one bruh, I hope we speak more about the true yield here. Invest ALL and reap MORE!

True yield 364days at 23%
inflation : 16%
Risk level : 1%
Awesome Investment! lol

chukzyfcbb:
You have spoken well just like your moniker AWESOME j .

yomi007k:


I hv been ticking receive interest upfront oo....see dulling. So I can get as high as 23 %.

God bless u boss

emmanuelewumi:
I also tick receive interest upfront which I always invest in the stock market, my dividends from the stock market are usually invested in Treasury Bills.

I also take personal term loans which I used in buying undervalued shares eg FBN @ N3.40, UBA @ N5.00, Dangote Flour @ N3.20

Fm4real06:
Pls explain hw buying of shares works for those that dont have indepth knowledge about it.