Olatunde Akanbi
Member
Treasury Bill Rates Just Dropped — What Should Investors Do Now?
If you have been enjoying the high interest rates on Treasury Bills, you need to pay attention to what is happening now.
The latest Treasury Bills auction has brought another major drop in rates following the CBN’s decision to cut its Monetary Policy Rate by 350 basis points to 23%.
At the September 23 auction:
• 91-day Treasury Bill: 15.50%
• 182-day Treasury Bill: 15.80%
• 364-day Treasury Bill: 15.89%
The biggest surprise?
Investors wanted the one-year Treasury Bill badly.
The 364-day bill attracted a massive ₦4.09 trillion in subscriptions against an offer of ₦400 billion.
That's more than 10 times the amount offered.
Yet, the rate still fell.
The 364-day stop rate dropped from 16.62% to 15.89%.
And this is where investors need to understand what is happening.
Interest rates are coming down.
The high-yield environment we enjoyed through July and August is beginning to change.
So if you have been keeping money in Treasury Bills, don't just look at the rate you are getting today.
Look at what happens when your investment matures.
If you invest at 15.89% today and rates continue falling, you may not be able to reinvest that money at the same rate when it matures.
This is called reinvestment risk.
For example, someone who locked money into a one-year Treasury Bill when rates were higher may continue enjoying that agreed return.
But someone whose Treasury Bill is maturing now may have to accept a lower rate when reinvesting.
So what should you be thinking about?
1. Don't chase yesterday's rate.
The 17%+ Treasury Bill environment is changing. What mattered six months ago may not be the same today.
2. Look at your investment timeline.
If you need the money in three months, locking it away for one year simply because the one-year rate looks attractive may not fit your financial plan.
3. Compare Treasury Bills with other fixed-income options.
Money market funds, bonds, fixed deposits and other instruments may have different rates, liquidity and risks.
Don't look at the percentage alone.
4. Think about what happens when the investment matures.
The rate you earn today is only one part of the decision.
Ask yourself:
"At what rate will I be able to reinvest this money later?"
That question becomes increasingly important when interest rates are falling.
And here's the interesting part:
Despite the lower rates, investors still poured ₦4.23 trillion into the latest auction.
That tells you something about investor appetite for government securities — but it doesn't mean every investor should automatically put money into Treasury Bills.
Your investment decision should depend on your goal, time horizon, liquidity needs and risk tolerance.
Don't just ask, "What is the interest rate?"
Ask:
"What role does this investment play in my overall financial plan?"
If you have been enjoying the high interest rates on Treasury Bills, you need to pay attention to what is happening now.
The latest Treasury Bills auction has brought another major drop in rates following the CBN’s decision to cut its Monetary Policy Rate by 350 basis points to 23%.
At the September 23 auction:
• 91-day Treasury Bill: 15.50%
• 182-day Treasury Bill: 15.80%
• 364-day Treasury Bill: 15.89%
The biggest surprise?
Investors wanted the one-year Treasury Bill badly.
The 364-day bill attracted a massive ₦4.09 trillion in subscriptions against an offer of ₦400 billion.
That's more than 10 times the amount offered.
Yet, the rate still fell.
The 364-day stop rate dropped from 16.62% to 15.89%.
And this is where investors need to understand what is happening.
Interest rates are coming down.
The high-yield environment we enjoyed through July and August is beginning to change.
So if you have been keeping money in Treasury Bills, don't just look at the rate you are getting today.
Look at what happens when your investment matures.
If you invest at 15.89% today and rates continue falling, you may not be able to reinvest that money at the same rate when it matures.
This is called reinvestment risk.
For example, someone who locked money into a one-year Treasury Bill when rates were higher may continue enjoying that agreed return.
But someone whose Treasury Bill is maturing now may have to accept a lower rate when reinvesting.
So what should you be thinking about?
1. Don't chase yesterday's rate.
The 17%+ Treasury Bill environment is changing. What mattered six months ago may not be the same today.
2. Look at your investment timeline.
If you need the money in three months, locking it away for one year simply because the one-year rate looks attractive may not fit your financial plan.
3. Compare Treasury Bills with other fixed-income options.
Money market funds, bonds, fixed deposits and other instruments may have different rates, liquidity and risks.
Don't look at the percentage alone.
4. Think about what happens when the investment matures.
The rate you earn today is only one part of the decision.
Ask yourself:
"At what rate will I be able to reinvest this money later?"
That question becomes increasingly important when interest rates are falling.
And here's the interesting part:
Despite the lower rates, investors still poured ₦4.23 trillion into the latest auction.
That tells you something about investor appetite for government securities — but it doesn't mean every investor should automatically put money into Treasury Bills.
Your investment decision should depend on your goal, time horizon, liquidity needs and risk tolerance.
Don't just ask, "What is the interest rate?"
Ask:
"What role does this investment play in my overall financial plan?"