How To Make Most Of Your Treasury Bills Investment This Year
Thinking of continuing risk-free investments in government securities this year? Treasury bills is still a way to go.
Treasury bills have become popular among retail investors recently due to the high yields as government aggressively issued the debt instrument last year to curb inflation and fund budget deficits.
But this year, you need to tweak your T-bills investment strategy because the interest rates will not be as attractive as last year’s.
Also Read: How To Invest In Treasury Bills
And this is because inflation is expected to just keep going down and CBN will crash the interest rate it lends to commercial banks.
So, for you to make the most out of your T-Bills investment this year, an investment expert and Managing Director of Afrinvest Securities Limited, Ayodeji Ebo suggests you focus more on the secondary market while paying attention to the Open Market Operations, OMO of the CBN.
“Before, OMO used to be the most attractive than treasury bills investment. But when you check current rates, it does not look that attractive. The CBN issued at 12.6% for the shorter tenure few days ago.
“But when you check the secondary market, it is trading around 14%. So, for a rational investor, you channel your money to the secondary market to invest than the OMO market,” Ebo said.
Read More: How To Invest In Bonds
T-Bills and OMO are similar and work almost the same way. Whilst T-Bills are issued to finance government budget deficit, OMOs are used by the CBN to control the volume of money in circulation. OMOs are also discount instruments in that you get your interest upfront, but they can also be bought in the primary and secondary market.
Depending on the objective and aggressiveness of the CBN per time, it might be possible to get higher rate on OMOs than T-Bills. OMO is also exempted from taxes and are issued at irregular intervals.
Also Watch: Treasury Bills: How To Calculate Your Earnings