FG reviews investment volume on instruments, auctions N213.76bn T-Bills

With the opening of the Federal Government of Nigeria Savings bond (FGNSB) on Monday March 13th 2017, the government has reviewed investment volume on its instruments, Treasury-Bills, FGN Bonds and savings bonds.

This was coming as government ‘s primary auction of Treasury Bills (T-Bills) to raise N213.76 billion holds on Wednesday, a development, cross section of analysts say would further tighten liquidity.

However, with the addition of the new Federal Government of Nigeria Savings Bond to the Nigerian market which commenced on Monday 13th of March 2017, the Federal government reviewed the investment market structure for investing in Nigerian Treasury Bills, FGN Bonds and FGN Savings Bonds; the new market structure for the FGN securities market will be as follows:

The new FGN instruments’ investment structure garnered by Daily Times Nigeria from Capital Bancorp research indicated that minimum of N5, 000, and maximum of N50,000,000 for investments in FGN Savings bonds.

Investments in Nigerian Treasury Bills requires a minimum subscription N50, 001,000, while N50, 001,000 was also pegged as minimum subscription for FGN bonds.
Daily Times Nigeria gathered from the Central Bank of Nigeria (CBN) treasury bills issue programme that the primary auction of Nigerian T-bills on Wednesday, 15th March, 2017 , are for three months (91 days) six months (182 days) and one year (264 days) for the following maturities.

The government is offering N39.01 billion T-Bills via the 91 days tenor T-Bills with maturity date of 15 June 2017, and N39.01 billion volume on maturity.
For the six months T-Bills, the federal government is offering N48.45 billion T-Bills with maturity date of 14th September 2017, which also has N48.45 billion volume on maturity, while for the 364 days T-Bills, the FG will be offering N126.30 billion T-Bills with 15th March 2018 as maturity date and N83.05 billion volume at maturity.
Rates in the secondary market in the last one week have remained relatively stable from previous weeks. Due to current market conditions, rates at the primary auction may close around what we have in the secondary market.

Meanwhile, Capital Bancorp Plc in a statement on how investors will take advantage of the FG instruments said that, following expected T-Bills auction on Wednesday, the rates it will bid at the auction via a licenced Primary Dealer and Market Maker (PDMM) are, 13 per cent for 91 days, 16.50 per cent for 182 days and 17.50 per cent for 364 days.
Settlement for this auction, the investment company said will follow the next day, Thursday, 16th March, 2017.

On how prospective investors should invest in the T-Bills, CBP enjoined clients to submit bids through licenced Primary Dealer and Market Makers (PDMMs), adding that all bids by individuals and institutions will be pooled together by tenor of 91, 182 and 364 days and that a single bid will be submitted for each tenor at rates to be determined by “CBP after carefully considering our clients’ interest and analysis of the market”.

CBP explained that the pooling of bids is necessitated as a result of challenges encountered by the PDMMs in processing a single client’s Treasury bill bid from start to finish on the CBN platform. Therefore, this approach is being adopted to improve efficiency and serve you better. CBP however does not commit that the bid rates proposed above will be successful. Notwithstanding, we would continue to seek alternative investment opportunities to meet your investment needs.

The investment outfit further explained that an investor will only be able to bid at individual rates when they have fully fulfilled its KYC documentation and requirements as well as investing the minimum amount of N50,001,000 required to participate in the treasury bill bidding process.