We are certainly in interesting times. Interest rates for treasury bills, one of the safest instruments issued by the government, is at a near 4 year high of between 14-16%. This is worth celebrating isn’t it? After all pension funds, mutual funds, discount houses and all the typical investment outlets where we save our money is bound to generate great returns for doing absolutely nothing.
If the government can comfortably borrow at 16% then who am I to complain when a bank charges me 30% on my car loan? Banks are going through a rough patch especially as there are very little good risk assets out there. They won’t finance the oil and has industry like they use to and neither will they go bullish for real estate. Stock Market is a no go area as well, thus narrowing the window for generating considerable interest income.
Luckily, the CBN as well as states has come to the rescue by offering them a lifeline—an extended invitation to come and party in the interest rate magic. I can’t wait to see the breakdown of the interest incomes banks will generate this by the end if this quarter because at 16%, you can hardly go wrong.
As for you and I, we are certainly not invited even though we fund the party. It’s tough times guys, strap your belt.
We can invest in Treasury Bills if we want to.
Yes we can. But can we borrow from the banks?