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How to bid for this week’s CBN Treasury Bills sale

CBN is scheduled to hold a Treasury Bills Primary Market Auction on 19th July 2018.

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Treasury Bills

The Central Bank of Nigeria (CBN) is scheduled to hold a Treasury Bills (T-Bills) Primary Market Auction (PMA) on 19th July 2018. The apex bank will be offering N5 billion, N26 billion and N145 billion on 91-day, 182-day, and 364-day maturity periods respectively. 

Here is a breakdown of the previous treasury bills sale.

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What does this mean?

In the last sale, the CBN sold N5.3 billion in 91-day treasury bills at an interest rate of 10%. The bills will mature on the 20th of September, 2018.

Treasury bills worth N20 billion were sold for the 182-day tenor, maturing on the 20th of December, 2018 at an interest rate of 10.3%.

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They also sold N14.6 billion 364-day treasury bills, maturing on the 20th of June, 2019  at a rate of 11.5%. All interests are per annum and payable upfront.

Here is the sale scheduled for this week.

What is the Minimum Amount I can Buy?

Previously, you could buy for as low as N10,000 and in multiples of N1,000 thereafter. However, this was increased to N50 million plus in 2017. You can still participate in this bid by approaching your bank and participating in the pooling fund option.

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Here, the bank pools funds from others like you, who do not have the minimum of N50 million plus required to participate in a direct bid. Some banks also have their own minimum limits for pooling funds which can be as high as N1 million.

You will need to know if your bank’s minimum requirement is financially compatible with yours so that you can bid with them, or shop for another bank with a compatible benchmark.

How Can I Buy Treasury Bills?

Assuming you own more than N50 million and wish to participate directly in the bid, you will have to approach your bank and request a form. Fill the form with your personal information, indicating the amount you want to buy, the tenor, and your bid rate.

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The bid rate, otherwise called your stop rate, is the likely interest rate that you have indicated to receive for the principal that you will be investing in the TBs.

If you do not own up to the minimum requirement stipulated by the government, you can approach your bank and hope that your request is eligible to be pooled along with others like you. If it is, fill the form stipulating the amount, and duration for your bid.

How is the Bid Rate selected?

The CBN selects the bids that fall below the accepted marginal rates. The Marginal Rate is the minimum average rate for bids submitted within a bid window.

For example, if the marginal bid rate for a bid opening on 5th July is 11%, then bids falling below this rate will be accepted and those above will be rejected.

Also, you can purchase TBs from the secondary market Over The Counter (OTC) through a broker.

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Are Treasury Bills Safe?

Buying treasury bills is one of the safest forms of investment; they are backed by the full faith and credit of the Federal Government of Nigeria. They are also tax-free.

What if my funds don’t get pooled?

You still have another option. You can get the bank to sell to you rediscounted treasury bills. This is basically buying from someone else who is in need of funds and not willing to wait until maturity.

Banks typically prefer this option for retail investors who have less than N1 million in cash to invest.

The difference between this and buying from the primary market is that you may not get the same interest rate when compared to those who bought from the primary market. However, the difference is not that huge.

Patricia

Fikayo has a degree in computer science with economics from Obafemi Awolowo University. ITIL v3 in IT service management. An alumnus of Daystar Leadership Academy. Prior to joining Nairametrics had stinct in Project management, Telecommunications among others. Also training in Consulting and Investment banking from Edubridge Academy. He has very keen interest in Politics, Agri-business, private equity and global economics. He loves travelling and watching football. You can contact him via [email protected]

1 Comment

1 Comment

  1. Eniola Adebiyi

    July 17, 2018 at 10:44 pm

    Very informative .

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Financial Services

Cornerstone Insurance’s board will meet July 22nd to consider 2 important issues

Directors typically meet to consider/approve financial statements before they are released.

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Cornerstone Insurance Plc

Cornerstone Insurance Plc’s board of directors will meet on July 22nd to deliberate on two important company issues.

A public notice that was signed by the Company Secretary and issued to the Nigerian Stock Exchange (NSE), noted that the two main talking points at this meeting are the company’s unaudited Q2 2020 financial statements, and the proposed issuance of bonus shares to the company’s existing shareholders.

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As you may well know, board members of many companies listed on the NSE are all scheduled to meet later this month, ahead of the release of these companies half-year 2020 earnings reports. Directors typically meet to consider/approve financial statements before they are released.

Meanwhile, between the time a company’s board of directors meet over their financial statements and the actual release of said financial statements, there is what is called “a closed period”. During this closed period, all persons with insider knowledge of the company’s affairs are prohibited from trading in the company’s stock.

In the case of Cornerstone Insurance Plc, a closed period on its stock will start from tomorrow (July 7th, 2020) and will remain effective until 24 hours after the release of the company’s Q2 2020 financial statements. Note that no date was given for the release of the Q2 financial report.

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“Accordingly, in line with the provisions of Rule 17.17: Closed Period, Rulebook of The Exchange, 2015 (Issuers’ Rule) and which has been incorporated into Sections 5 and 6 of the Company’s Securities Trading Policy, all Directors, Persons discharging managerial responsibility, Adviser(s) of the Company, or their connected persons shall not trade in the Company’s shares from Tuesday, July 7th, 2020 until 24 hours after the release of the Company’s Unaudited Financial Statements for the Second Quarter ended June 30, 2020 to the NSE and the general public,” part of the statement by the company said.

Recall that Nairametrics reported some months ago that Cornerstone Insurance Plc was in merger talks with some insurance companies ahead of the recapitalization deadline set by the National Insurance Commission (NAICOM). The company’s Group Managing Director, Ganiyu Musa, disclosed that consolidation is a more viable option towards meeting NAICOM’s recapitalisation requirement.

It is uncertain, at this point, if the company is still considering a merger as a viable option. This is because in March 2020, Nairametrics reported that Cornerstone Insurance Plc is one of the insurance firms that have resorted to selling off their real estate properties in order to raise money. The reported had quoted the MD discussing how his company “took the big decision to sell the property which we did at a very handsome price. And just in one fell swoop, it resolved many issues. We now have a significant amount of liquidity, we do not have the headache of recapitalisation and we have done what the regulator wants, which is to convert any property to cash.”  

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Meanwhile, NAICOM has since postponed the recapitalisation deadline to September 2021 due to the economic challenges posed by the COVID-19 pandemic.

Note that the company reported a gross premium income of N4.6 billion in Q1 2020, compared to N4.8 billion in Q1 2019. However, profit for the period stood at N475.1 million, as against a loss after tax of N98.4 million during the comparable period in 2019.

The company’s stock opened today’s trading on the Nigerian Stock Exchange with a share price of N0.50. Year to date, the stock has gained roughly about 20%.

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Appointments

PwC admits 8 Nigerians, 16 others as partners across Africa 

PwC has about 400 partners and over 9,000 people spread across 34 countries in Africa.  

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PricewaterhouseCoopers (PwC) has admitted 24 professionals in Africa, including 8 Nigerians, into the firm’s partnership.

Akinyemi Akingbade, Chioma Obaro, Yinka Yusuf, Wura Olowofoyeku, Tosin Labeodan, and Rukaiya El-Rufai were all admitted into the firm’s Assurance practice, while Kunle Amida and Olusola Adewale were appointed into Advisory.

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From South Africa, nine partners were also admitted; Lumko Sihiya, Mary-Jane Mberi, Nitassha Somai, Erik Booysen, Dale Stonebridge, and David Hill, into Assurance.

Kerin Wood and Gavin Johnston have admitted partners into Advisory, and Michael Butler into the Tax and Regulatory Services.

In Zambia, the partners admitted include George Chitwa, Tax, and Martin Bamukunde in Assurance.

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Andre Burger was admitted Partner, Assurance in Namibia; Mwangi Karanja, Partner Assurance in Kenya; and Icho Molebatsi, Partner Assurance, in Botswana.

Two partners were admitted in Ghana, Richard Ansong in Assurance; and Kingsford Arthur in Advisory.

READ MORE: Dual citizenship firm opens office in Nigeria for millionaires, charges over $1 million

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About PwC

PricewaterhouseCoopers is a multinational professional services network of firms headquartered in London, United Kingdom, operating as partnerships in several countries under the PwC brand.

PwC has about 400 partners and over 9,000 people spread across 34 countries in Africa.

 

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Hospitality & Travel

Arik Air to resume flights on July 8 as FG lifts ban on air travel

Capt. Roy Ilegbodu announced that Arik Air airline would operate 3 flights from Lagos and Abuja in phase 1 of the re-opening.

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COVID-19: Arik Air suspends flights to West Coast, COVID-19: Arik Air. Aero, Dana, others suspend flight operations, Arik Air to resume flights on July 8 as FG lifts ban on air travel

Following the announcement by the Aviation Ministry that the Lagos and Abuja airports will reopen on the 8th of July, Arik Air announced on Sunday that its domestic flights will resume from July 8.

Chief Executive Officer, Capt. Roy Ilegbodu, announced in a statement that the airline would operate 3 flights from Lagos and Abuja in phase 1 of the re-opening. He also announced that flights to Port Harcourt will begin on July 11 when the airport reopens. Some part of his statement read:

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“We are ready to fly our esteemed customers again. All preparations have been made to make flying in this extraordinary period in the world safe and pleasurable.

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“The airline has put various measures in place, in line with COVID-19 health protocols, as recommended by the World Health Organisation (WHO), International Civil Aviation Organisation (ICAO) and the Federal Government of Nigeria.

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“Passengers have been assured of their safety and wellbeing at every stage of their flight.

“Arik has worked actively with aviation agencies for an effective re-start of the industry and also ensure that agreed health measures are effectively implemented.”

READ MORE: FAAN bans non-travelling passengers from airport as flight operations resume

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The CEO then advised that passengers come properly kitted with face masks during the flights.

Arik Air suspended operations on March 27 after the Federal Government closed the airports to contain the spread of COVID-19 in Nigeria.

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