A-Z of how to invest in Nigerian Treasury Bills

This article explains how to invest in Nigerian Treasury Bills

  • This is a beginner’s guide to investing in treasury bills.
  • It explains the meaning of treasury bills and how you can invest in it
  • It also explains how the interest is earned and when it is paid to an investor
  • It also highlights the benefits of investing in treasury bills

What are Treasury Bills?

Treasury Bills are government guaranteed debt instruments issued by CBN on their behalf to finance expenditure. The CBN also uses treasury bills to control money supply in the economy

How are Treasury Bills Sold?

Treasury Bills are sold through a bi-weekly auction conducted by the CBN. Buyers are requested to quote bids following which the average minimum bid is selected.

Where can I buy Treasury Bills?

Treasury Bills can be bought through any official dealer. The easiest will be through your bank

What is the Minimum Amount I can Buy

Before, you could buy for as low as N10,000 and in multiples of N1,000 thereafter. However, this was increased to N50,000,001 in 2017. This article explains how you can buy treasury bills if you do not have up to N50 million.

When is it usually sold?

Treasury Bills is sold every other Wednesday (bi-weekly) as announced by the CBN. The CBN announces issuances in their websites and in the pages of the Newspaper. You can also ask your bank account officer to notify you ahead of an issuance.

How Can I Buy Treasury Bills

To buy Treasury Bills you will have to approach your bank requesting for a form. You fill the form with your personal information also indicating the amount you want to buy as well has your bid rate.

What is the bid rate

The bid rate otherwise called your STOP RATE is the likely interest rate that you have indicated ti receive for the principal that you investing in the TB’s. For example you can indicate an interest rate of 10% as your expected rate. Your bid rate will most likely be different from that of other intending buyers of TB’s.

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 opened Wednesday 4 September is 11% then bids falling below this rate will be accepted and those above rejected.

What if I don’t have a Bid rate

If you do not have a Stop Rate or you are not sure of a rate you can select the option of having the bank choose a rate for you. However, this does not guarantee that the bank rate will be chosen or will be the best.

Can I still buy if my Bid is rejected

You can purchase TB’s from the secondary market Over The Counter (OTC) through a broker. This is also where buyers and sellers of TB’s trade the notes in exchange for cash.

What are the durations (tenor) for the TB’s

Treasury Bills are usually for 91days, 182days and 364 days. As such, you can have the CBN hold your cash for 91days or 182 days or 364 days depending on your choice. However, the CBN can decide they want to sell Treasury Bills for all the tenor available or either of them.

Can I sell before Maturity

Yes you can sell Treasury Bills before maturity. As mentioned above, this can be done through the OTC market. The price at which you sell depends on the forces of demand and supply. For example a N100,000 face value TB maybe selling for less or more depending on the yield expectation of the buyers. If your face value is trading at a higher price, it means you can sell your treasury bills at a profit as such your N100,000 can sell for N101,000 or more. If your face value is trading at a lower price, it means you can sell your treasury bills at a loss as such your N100,000 can sell for N99,000 or less.

When is the interest paid?

The interest element of a treasury bill is paid to you upfront and credited to your bank account. For example, if you purchase a N100,000 TB with an interest rate of 10% the CBN debits your account with N90,000 as such your N10,000 interest is paid upfront. Upon maturity, you are paid the face value N100,000. The upfront payment of your interest makes your true yield actually higher.

What is a True Yield?

True Yield is your actual Return on Investment. (ROI). Using the example above, the initial yield for the N100,000 is 10%. However, because they pay you interest upfront your true yield is actually the N10,000 in interest divided by the N90,000 actually deducted from your account. That is N10,000/N90,000 0r 11.11%. This is thus higher than the 10% coupon. The True Yield is completely earned when you hold to maturity.

Can I roll over my investment

The CBN does not rollover your investment automatically. However, you can give your bank a mandate to rollover the principal on your treasury bill upon maturity. You can also get the benefit of compounding interest by asking your bank to reinvest the interest portion of your TB once it is paid.

Are Treasury Bills Safe

Treasury Bills are one of the safest forms of investment and are backed by the full faith and credit of the Federal Government of Nigeria

Apart from the Interest Rates what are the benefits

  • A good source of steady stream of income
  • Treasury Bills are a good investment outlet for your free and disposable cash
  • Treasury Bills are good investments for people who wish to save
  • Treasury Bills are also tax free
  • Treasury Bills are very liquid and can be converted to cash quickly
  • They can be used as a collateral

Are Treasury Bills Taxable

Interest derivable from Treasury Bills are not taxable.

This article originally appeared on Nairametrics on the 8th of September 2017. It has been updated to reflect new changes to Treasury Bills .


    • They don’t unilaterally reduce it. They just choose the average bids submitted by all banks. So if your bank bidder higher than the average, they lose out. Cheers

  1. Pls I heard the interest is calculated per annum irrespective of the tenure you buy for eg, i buy 100,000 for 91days at an interest of 10percent, what will i get after the 91days?

  2. Please can I stop the treasury bills any time I like, in case I need my money 4 something important. Thanks

    • Yes you can. Just approach your bank and tell them you want to sell. But be ready to get a lower amount as they will deduct part of the interest already paid to you upfront. Regards

  3. I only want to thank you for this wonderful site. I have been looking for explanation on treasure bills and govt bonds. I now have insight on what they represent. Thank you again. Keep it up.

  4. Hello ugi,interesting piece..my question on TBs is does the duration affect the rate of interest and expected yield on it?the interest rate on a 91day period same as,364dys?

  5. Thanks for all the explanation. My question is if my interest bid in bonds fail to be accepted, can I still have my cash back .

  6. i want to have clear understanding on returns in investing in treasury bills, particularly how the rate is applied for 91days, 182 days and the rest.Also which is better in terms of return(fix deposit or treasury bill).


  7. I bought the 364 days treasury bills as at March when the interest rate was less than 10%. Now I do not want to hold the bills till maturity because the rate is now higher. What steps do I need to take to get my money back in order to re-invest at higher interest rate?

    • I am in the same problem. I am ready to let go of the profit if they won’t touch my capital invested. I bought for 12% rate and wouldn’t mind selling for same rate if they wont touch my capital invested. Pls advice.

        • Please there is NO SUCH THING as UPFRONT INTEREST, stop misleading people. If you are investing 900k to get 1m you cannot say you have earned 100k interest please. You earn the interest over the tenor of the investment, PLEASE PLEASE AND PLEASE AGAIN NO INTEREST UPFRONT.

    • This is quite simple. Approach your bank and tell them you want to sell. They will pay you back your capital and deduct the portion of your interest earlier paid to you that is yet to mature. So for example, you invest N1million and 10% for one year. Assuming you went for a 1 year maturity, the CBN will deduct N900k from your bank and pay you N100k upfront as interest. After one year, they credit your bank account with N1m meaning you get a total of N1.1m and gained N100k. Now assuming you decide to hold for only 6 months, the bank will pay you back N950k instead of N1m. So you get in total N100k (collected earlier) plus N950 paid in six months. In total that is one million fifty thousand naira only. Your gain is N50k. Hope this explains it.

      • Hmm, are you sure there are no further deductions by the bank. Things like commission on transaction etc. Because they would usually make some deductions even on the interest paid by CBN.

  8. This is such a wonderful and life changing tutorial on treasury bills and bonds. Is this all it takes to start investing in treasury bills or there are still more to do?

  9. I have 2 questions. Is it possible to hold the upfront interest to maturity date and what is the implication of doing this on the interest rate.
    Could you please give a sample letter with reinvesting upfront interest to bank to purchase treasury bill assuming you are out of the country.

    Thanks for all you do.

  10. Pls my question is,if I invest 1. m for instance for a period of one year, the 100k interest is it for the monthly bases or its the interest for the whole year?thanks

  11. Thanks for the article it’s cleared some doubt & ignorance on NTB.

    When can one invest in Nigerian TB?

What's your say?