Nigeria sells 1 year treasury bills at 18.8% interest (23% in true yield)


Nairametrics| The Nigerian Government via the CBN has sold treasury bills worth over N242 billion in 90 days, 182 days and 364 day auctions respectively in its May 3rd 2017 auction.

The CBN sold a total of N178 billion in 364 days tenor at a whopping interest rate of 18.8% and a true yield of 23.1%.

A true yield takes cognizance of the fact that interest is paid upfront during treasury bills sale, thus when you factor in that the interest of 18.8% is front paid, your yield (income over investment) is 23%. A N10 million investment for example, will pay you N1.8 million interest, however you receive it at the beginning of the investment rather than at the end as is with most investments. The time value of money and the extra income that you can get if you invest the N1.88 million is calculated as the True Yield of your investment.

Investors in the CBN’s one year Treasury Bills, will earn a return that is far above the current inflation rate of 17.26%.

See Treasury bills sale report.

Treasury bills sale as at May 3rd 2017

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