Your interest in this article probably shows you have some amount of money and need a good investment vehicle to grow the money in less than a year with little or no risk. If this describes you, then you are obviously in the right place. In Nigeria’s highest yielding T-bills, Investment opportunities abound in Nigeria’s financial markets, but it takes more than the finance classes you attended back then in the university to invest in Nigeria’s capital market today. The reasons are countless, but one of the most striking is the high risks that accompany most of the investment options, no thanks to sluggishly-growing Nigerian economy.
Nigerian stocks are down some 11.67 percent since the start of the year as at the close of business Friday on the Nigerian Stock Exchange (NSE), that’s a little bit fair when the performance is compared with companies underperforming the equity market’s broad index such as International Breweries Plc, PZ, Total Nigeria and GlaxoSmithKline (GSK) having lost more than half of their market value year-long.
This implies a N100,000 invested in those firms at the beginning of the year has depreciated to at most N50,000 after Friday’s trading session. While some other companies such as Dangote Flour, BOC Glass and MTN Nigeria have gained significantly, the uncertainty of policy direction in Nigeria calls for cautious trading in the stock market.
However, while the uncertainty and slow growth raise some red flags in the stock market, they are flashing some “green-like” flags in the money market where debt instruments with less than a year maturities are traded. In fact, yields – a measure of return on investment – on Nigerian government treasury bills (T-bills) are rising, implying the federal government is paying investors more for the risks in the economy.
Where can I buy these T-Bills?
Investors willing to buy the Nigerian government T-Bills could access the instrument during a primary market auction conducted for the instruments by the Central bank of Nigeria (CBN) or in the secondary market such as the NSE or FMDQ Securities Exchange.
In the Nigeria Treasury Bills market, there are three different notes available at the primary market auction; they comprise the 91-day, 182-day and 364-day bills. Interested investors could purchase either or a combination of the instruments by contacting any of the 129 stockbroking firms appointed as distribution agents by the Debt Management Office (DMO).
A result of CBN’s auction conducted Wednesday shows the apex bank has continued to raise spot rates on the short-term instruments to 11.10 percent, 11.799 percent, and 13.286 percent, respectively.
While you might have missed an auction conducted Wednesday, there is an opportunity to buy from investors who are not willing to hold on to their assets until the maturity date at the secondary market.
A number of metrics pertaining to the instruments change once they are listed on the secondary markets among which are the time to maturity which reduces daily, and the yields which vary to reflect the risks involved in the instruments. It is noteworthy that higher yields mean additional risks!
Based on the data obtained from the FMDQ Securities Exchange on Friday, there are 40 different bills trading at the exchange. We compiled a list of 15 Nigeria’s highest yielding T-Bills from the 40 outstanding bills investors can lock in to maximise their investments.
