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  #41 (permalink)  
Old 17th March 2017, 08:57 AM
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Default Re: Nigerian Treasury Bills

Quote:
Originally Posted by migiets View Post
You mean you will be charged a penalty if you did not hold to maturity?. If it is going to be traded, does it not mean that i can decide not to hold to maturity by selling?. If such happens, what happens to the third party that bought off me?.

Am also learning.Am curious to know.Assuming i bought the FGNSB worth 1 million naira and after 7 months decide to sell due to the fact that i need the cash urgently

Am i going to get 1 million naira back?What will the person buying from me get in return, whats the attraction for someone to buy it off me.What about transaction costs to CSCS,NSE and stockbroker?
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  #42 (permalink)  
Old 17th March 2017, 09:20 AM
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Default Re: Nigerian Treasury Bills

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Originally Posted by Waves View Post
Apart from DMO, CBN also sells bills mainly to banks for liquidity management operations. These are called the Special Open Market Operation (OMO) bills and ideally only Banks are allowed to participate. Usually, the bills have to be held to maturity and are not traded. Such CBN auctions don't generally have a timetable (but usually occur on Tuesdays and Thursdays) and usually dictated by the level of liquidity in the system. Usually, a lot is issued around FAAC releases. Typically, CBN offers rates more than DMO. Many people who think they are buying TBill through banks are usually buying this instrument with the bank giving the customer lower rate than the got and enjoying the spread. NTBs that are traded on FMDQ are DMO bills usually sold on its behalf by CBN.
Hope this helps
One SMN Thanks. It more than helps. Impressive analysis and breakdown.

The bold is really an eye opener as somebody said that he was given a secondary market rate he saw as too good to be true and was wondering if the bank had a large stock of long term NTBs that they want to dispose off for them to be offering such a mouth watering rate.
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  #43 (permalink)  
Old 17th March 2017, 09:22 AM
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Default Re: Nigerian Treasury Bills

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Originally Posted by Getthere View Post
Am also learning.Am curious to know.Assuming i bought the FGNSB worth 1 million naira and after 7 months decide to sell due to the fact that i need the cash urgently

Am i going to get 1 million naira back?What will the person buying from me get in return, whats the attraction for someone to buy it off me.What about transaction costs to CSCS,NSE and stockbroker?
So many unanswered questions. Where is Oga Waves?. The guy seems to be a guru in this thing.
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  #44 (permalink)  
Old 17th March 2017, 10:17 AM
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Default Re: Nigerian Treasury Bills

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Originally Posted by migiets View Post
So many unanswered questions. Where is Oga Waves?. The guy seems to be a guru in this thing.
He certainly seems to be. It also seems most bankers and Finance/investment people I've spoken to aren't too impressed with the Savings bond, I am not however sure yet if that is a good or bad thing considering the various levels of greed that motivate people in that sector and their tendency to be elitist in orientation
I think this is mostly about Financial inclusion for people with low net worth i.e. The 'Common man'.
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  #45 (permalink)  
Old 17th March 2017, 11:18 AM
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Default Re: Nigerian Treasury Bills

Quote:
Originally Posted by Getthere View Post
Am also learning.Am curious to know.Assuming i bought the FGNSB worth 1 million naira and after 7 months decide to sell due to the fact that i need the cash urgently

Am i going to get 1 million naira back?What will the person buying from me get in return, whats the attraction for someone to buy it off me.What about transaction costs to CSCS,NSE and stockbroker?
We have to wait and see the exact detailed transactions costs

The savings bonds is like any other bond. The pricing is based on the discounted cash flows (the quarterly coupons and the principal payment) as well as and the change in general interest rates (duration).

In your example, having held the bond for 7 months, you would have already collected quarterly coupons twice. At the 7th month, the price you will get will determined by 1) the change of interest rates (if subsequent bond issues come out at lower rates, your bond price would have risen.). 2) The fact that by the 7th month you will have earned, but not yet collected interest, for 1 month. Your price will reflect that

The attraction for someone to buy from you may that susbsequent bond issues may be limited and the guy is unable to get from DMO or that the subsequent bonds are issued at lower than 13% in which case your bond is more valuable.

Quote:
Originally Posted by duduspace View Post
He certainly seems to be. It also seems most bankers and Finance/investment people I've spoken to aren't too impressed with the Savings bond, I am not however sure yet if that is a good or bad thing considering the various levels of greed that motivate people in that sector and their tendency to be elitist in orientation
I think this is mostly about Financial inclusion for people with low net worth i.e. The 'Common man'.
I will be surprised if bankers like this bond. This is a direct assault on their business. This bond cannot be good for bankers. If DMO had relied on them to sell, they would have killed it.
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  #46 (permalink)  
Old 20th March 2017, 08:08 PM
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Default Re: Nigerian Treasury Bills

Quote:
Originally Posted by Waves View Post
We have to wait and see the exact detailed transactions costs

The savings bonds is like any other bond. The pricing is based on the discounted cash flows (the quarterly coupons and the principal payment) as well as and the change in general interest rates (duration).

In your example, having held the bond for 7 months, you would have already collected quarterly coupons twice. At the 7th month, the price you will get will determined by 1) the change of interest rates (if subsequent bond issues come out at lower rates, your bond price would have risen.). 2) The fact that by the 7th month you will have earned, but not yet collected interest, for 1 month. Your price will reflect that

The attraction for someone to buy from you may that susbsequent bond issues may be limited and the guy is unable to get from DMO or that the subsequent bonds are issued at lower than 13% in which case your bond is more valuable.



I will be surprised if bankers like this bond. This is a direct assault on their business. This bond cannot be good for bankers. If DMO had relied on them to sell, they would have killed it.

Thanks for this feedback
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