This people dey use us play kpang-kpang-golo.

feelamong:


Exactly why i advise everyone to hedge against Naira assets! Make sure you have diversified your investments and earnings from only NAIRA!

I learnt some bitter lessons from the last devaluation and vowed never to be caught off guards again..

All Emefiele has been doing is Quantitative easing,..... which in lame man terms is PRINTING MORE MONEY FOR THE FG.

If the Price of Oil does not get to $80 in the medium term... we are doomed!

be warned!!

Hello Folks

I understand from my bank (Zenith) that there would be no auction this week and it seems to match the published schedule which has the 28th September blank.....Any thoughts on this

Nadaje

Analysis] CBN’s deficit financing; A word of caution on interpretation
By walesmit -
September 25, 2017

As is customary ahead of the start of its two day monetary policy retreat for September 2017, the Central Bank of Nigeria (CBN) released the personal statements of members of the monetary policy committee (MPC) from the July meeting. In one of the statements, Dr. Doyin Salami, stated that the apex bank has been running a piggy bank for the Federal Government of Nigeria (FGN).
At the heart of the claim, which mirrors a similar complaint by the ex-governor Sanusi Lamido Sanusi in late 2016, is the marked rise in CBN’s loans to the FGN which stood at N5.2tr in July 2017 going by data from the CBN. However, having examined more data from the CBN, I think it would be important to state that growing FG borrowings from the CBN is only half the story and piecing the other half would help place things in proper perspective.
In financial accounting, the balance sheet ‘balances’ when assets equate to the sum of liabilities and equity. From a banking perspective-as the CBN accounts are kept- a loan to another party in the view of a lender is an asset and going over CBN’s monthly balance sheet data available on its website, CBN loans to the FG are positioned on the asset side of CBN’s balance sheet. Looking back, from under N600bn in 2010, FGN borrowings from the CBN have climbed on an average of 45% per annum over the last seven years to over N5tr.

As a share of CBN assets, its loans to the FGN rose from under 8% to 20% in 2017. The big jumps occurred in 2016 and suggest that faced with a steep drop in oil revenues, the Nigerian government turned to the CBN to bridge funding shortfall with a marked rise in the volume of overdraft facilities made available to the FG by the CBN. On the face of the data, it would appear that Dr Salami’s accusations are correct.
Figure 1: CBN loans to FG: Components

Source: CBN * As at July 2017
However, as stated earlier, in a balance sheet, all assets (including loans in this case) have to be financed from either liabilities or capital. In the case of a bank, this would be primarily via deposits and then from borrowings or equity. So what is the corresponding deposit item on the CBN balance sheet for the loans it is providing to the FGN? Looking at the liability side of CBN’s balance sheet reveals it clearly – FGN deposits.
As the banker to the FGN, and following the implementation of the Treasury Single Account (TSA), the CBN is the natural domicile for FGN deposits. Gleaning through the numbers reveals that FGN borrowings look like a cash backed loan as effectively the FGN borrows against its own deposits with the CBN. Looking at trends, after holding steady then declining in 2014-16, FGN deposits jumped in 2015 as the TSA effectively sequestered all deposits from the banking system into the CBN to N5.26tr. Hence, the FG is merely taking an overdraft facility against its own deposits.
Figure 2: FGN deposits: Components

Source: CBN * As at July 2017
Combining both FG deposits and loans together places things in a proper context – from a little under 30% of its deposits, prior to the oil price shock, the FG is now borrowing against most of its deposits to the CBN with the 2016 number at a record high of 98%. Viewed from this light, and keeping the balance sheet perspective in mind, there appears to be nothing wrong on a net basis. However, there are likely to be concerns raised from an income statement perspective, where one would need to match the incremental CBN claims to the FGN against statutory requirements in the CBN Act 2007 which mandate that ‘the total amount of,…, advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government’. What is unclear is whether the advances referred to are net or gross sums and this suggests that the matter might be subject to legal interpretation. From a ‘substance over form’ standpoint, in my opinion, a net basis sounds more realistic in the light of TSA implementation.
However, this would also imply that the finance ministry is not immune from accusations of poor treasury management as clearly they are unable to manage cash flows in a manner that limits FGN reliance on overdraft facilities. The way to look at these borrowings is that they are  cash backed loans; this reflects an inefficient liquidity/treasury management operation by the finance ministry as it does not have sufficient control over its own funds and expenditure. Cash management ought to be the bread and butter of the finance ministry but on the evidence presented, it appears its merely an allocation and spending unit and less serious on planning.
Figure 3: FGN borrowings and deposits with the CBN

Source: CBN
From the data and analysis presented, the claim of unrestrained CBN deficit financing appears to not be something worth worrying about. However, what would follow is the Dr. Salami’s claim that these borrowings to plug a bulging FGN deficit being funded via CBN’s aggressive liquidity tightening from the financial system. Cue the now generic crowding out argument against the FGN. Also, as the data shows, the FGN is merely borrowing against its own deposits, though this is inefficient as new money is not being created.

https://nairametrics.com/analysis-cbns-deficit-financing-fg-not-thought/

Is anyone declaring taxes for thier Tbills with this new VAISDNG scheme?



Pls let knowlegeable ppl counsel us so that we dont lose big in the long run.

Tbills is tax Free.

yomi007k:
Is anyone declaring taxes for thier Tbills with this new VAISDNG scheme?



Pls let knowlegeable ppl counsel us so that we dont lose big in the long run.

amjustme2:
Tbills is tax Free.

Thank u

UWC

yomi007k:


Thank u

Which bank currently have the best rate? (secondary market/primary)... 400k...91days)

katamo:


We should be careful when we compare T-bills to money market funds (MMF).

The accurate way to compare them from a rate of return perspective is to look at true yield of the T-bill versus the yield of the MMF. A 17% marginal interest rate for a 364-day T-bill equates to a return of ~20.5%.

There is also the issue of different risk profiles between T-bills and MMFs. MMFs invest in short-term government securities such bankers acceptances, commercial paper and CDs in addition to T-bills. These other instruments have higher risk and therefore should provide higher returns to reflect the additional risk.

You have to also consider fees charged by the funds. I think FBN charges 0.75% for their MMF. This will also be a reduction to you return.

Finally, the yields shown on the link are based on historical performance. As T-bill rates decline, this will also result in MMF yield declining as well. The current primary rate reflect the returns investors are going to achieve over the next 90, 180, 364 days (that is they are forward-looking) and not historical like what FBN is presenting.

Ultimately, the return on MMFs will be a bit lower than that of T-bills. If you are a passive investor and don't want to be bothered with managing your T-bill investments and would rather have someone else do it for you, then investing in a MMF is a viable alternative.

Asper what feelamong said regarding diversifying your investments, I think I might I've fallen into the trap a second time. First one I did was fixed deposit lost a lot of money because I changed hard currency for that purpose. Now I've done it again, but this time with Treasury bills. From what I gather here it looks like this may be a mistake (rates dropping, price of crude, etc) . Would it have been better to hold on to hard currency, rather than investing in Treasury bills? I'm a learner here, so any advice w6be appreciated.

junglep:


Asper what feelamong said regarding diversifying your investments, I think I might I've fallen into the trap a second time. First one I did was fixed deposit lost a lot of money because I changed hard currency for that purpose. Now I've done it again, but this time with Treasury bills. From what I gather here it looks like this may be a mistake (rates dropping, price of crude, etc) . Would it have been better to hold on to hard currency, rather than investing in Treasury bills? I'm a learner here, so any advice w6be appreciated.

My take... when you diversify to Dollars assets; you dont just buy dollars and keep under your mattress... it may work once in a while but its destined to fail most of the times..

when you diversify to dollar or Euro assets .. also make sure the asset is earning for you. Look at investments in Eurobonds, Bitcoins/Cryptocurrency trading (if you understand that), Gold ETF, etc

As for me .. i do both Eurobonds and Cryptos!

Thanks feelamong for the quick response. I really appreciate it. Could please point me in the right direction for Euro bonds?

Following up on junglep question directed to feelamong above,

When is the next eurobond auction going to take place and which broker do use?

Thanks

Izuogu1:
Which bank currently have the best rate? (secondary market/primary)... 400k...91days)

I just did FBN for someone two days ago 500k 87 days @ 13% there was no 91 days. Not bad...

dotcomnamename:


I just did FBN for someone two days ago 500k 87 days @ 13% there was no 91 days. Not bad...

Same here,I did 87 days on Monday 25th September 2017 for 13% and another 283 days for 17% all from First Bank.

I will definitely have a premature termination of the investments to partake in the forthcoming right issues of Lafarge WAPCO and Flour Mills if Nigeria

Santino1:
Following up on junglep question directed to feelamong above,

When is the next eurobond auction going to take place and which broker do use?

Thanks

You do not need to wait for the next Eurobond auction..

You can buy from the secondary markets from Stanbic IBTC or from UBA capital

Guys don't get @FEELAMONG wrong......if am not mistaking, he is trying to say we should not put all our eggs in one basket.

Diversify means sharing ur funds into different viable investments. U could have TB positions as well as Eurobonds or gold.

Pls how do I buy the eurobonds....

dotcomnamename:


I just did FBN for someone two days ago 500k 87 days @ 13% there was no 91 days. Not bad...

thats I will get 13% of 400k after 87days which is N52k..Right?

Izuogu1:
thats I will get 13% of 400k after 87days which is N52k..Right?

IZUOGU how now ?

R

Izuogu1:
thats I will get 13% of 400k after 87days which is N52k..Right?

The 13% is per annum.

Izuogu1:
Which bank currently have the best rate? (secondary market/primary)... 400k...91days)

Pry market - Stanbic Ibtc always
Sec market - First bank always

.

ihedioramma:
IZUOGU how now ?

fine sir

emmanuelewumi:
R


The 13% is per annum.

per annum.that means 365/4=91.25... The 13% will be divided by 4..Right?

Investnow2017:


Pry market - Stanbic Ibtc always
Sec market - First bank always

.

Ok..thank you.. Will open an account in Stanbic soon

zamirikpo:
Guys don't get @FEELAMONG wrong......if am not mistaking, he is trying to say we should not put all our eggs in one basket.

Diversify means sharing ur funds into different viable investments. U could have TB positions as well as Eurobonds or gold.

Pls how do I buy the eurobonds....

I know. I have Naira denominated T-Bills to service my Naija expenditures. However, My Euros have not been earning money. They are just sitting in my bank account and I for one hate my money to sit idle. You know the saying "You use money to make money".

Cheers

zamirikpo:
Guys don't get @FEELAMONG wrong......if am not mistaking, he is trying to say we should not put all our eggs in one basket.

Diversify means sharing ur funds into different viable investments. U could have TB positions as well as Eurobonds or gold.

Pls how do I buy the eurobonds....

Gbam.. just diversify wella!

You do not need to wait for the next Eurobond auction..

You can buy from the secondary markets from Stanbic IBTC or from UBA capital

feelamong:



Gbam.. just diversify wella!

You do not need to wait for the next Eurobond auction..

You can buy from the secondary markets from Stanbic IBTC or from UBA capital

Do we have a thread on eurobonds or anywhere I can feed off some useful info.

zamirikpo:


Do we have a thread on eurobonds or anywhere I can feed off some useful info.

No sir... maybe will consider that when am done with the Cryptos businesses

feelamong:


No sir... maybe will consider that when am done with the Cryptos businesses

Hey Feelamong, so long as the crypto tide is in your favour i dont see you getting done with crypto pretty soon All investors are like that :

Please open a Eurobond thread NOW so others can share their tips to enable us all benefit. You thereby add to your remarkable legacy

As Feelamong said, it is wise to diversify your assets. We should diversity across asset types such as stocks, bonds (including T-bills and other types if fixed income instruments corporate bonds, commercial paper, CDs etc.) or alternative assets (including real estate and gold/precious metals and other alternatives -bitcoin/crypto-currencies will fall into this bucket). We should also diversity across geographies to guard against the impact of economic risks such as inflation and unfavourable forex movements). If you can get exposure to different assets classes across different geographies and different sectors/industries, then you will be able to reduce the overall risk of your portfolio (i.e. by reducing volatility/fluctuation in the value of your assets).

Izuogu1:
thats I will get 13% of 400k after 87days which is N52k..Right?

You will get about 12k+ for 87 days