CBN Plans To Borrow N2.2Trn For Fed. Govt Via Treasury Bills

The Central Bank of Nigeria (CBN) has stated plans to borrow about N2.2Trn for the Federal Government through the issuance of treasury bills.

For the purpose of interpretation, Treasury Bills, also known as T-Bills, are government-backed, short-term securities issued by the CBN, with a maximum maturity of 364 days.

The government could resort to treasury bills when it needs financial bailout, but with higher repayment obligations, in the sense that they are sold at a discount from their face value.

CBN said it would be selling Treasury Bills worth N2.2 trillion in the fourth quarter of 2024, at its Nigeria Treasury Bills Issue programme today.

The exercise would commence on September 4, and end on November 20, 2024, the apex bank stated.

It said it would issue TBs worth N158.79 billion on 91 days tenor, N109.61 billion on 182 days and N1.94 trillion on 364 days.

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N622.72 billion worth of TBs in September, and this would be made up of N54.53 billion worth of 91 days bills, N41.05 billion worth of 182 days bills and N527.14 billion worth of 364 bills.

In October, it would be N456.57 billion worth of TBs, made up of N41.61 billion worth of 91 days bills, N34.66 billion worth of 182 days bills, and N380.3 billion worth of 364 days bills.

On the other hand, it would sell  N1.12 trillion worth of TBs comprising N62.64 billion worth of 91 days bills, N33.9 billion worth of 182 days bills and N1.03 trillion worth of 384 days bills in November.

How do treasury bills work?

Treasury Bills are sold through a bi-weekly auction by the CBN. Buyers quote bids and the average minimum bid is selected. The Government sells these bills at a lower price (lower than face value). Next, the investor holds on to the T-Bills until the maturity date, and eventually, is paid the full price of the face value, states Cowriewise