Fixed income

True annualised return on a Nigerian Treasury bill. Buy at a discount (e.g. ₦950K for ₦1M face value), receive face at maturity. 364-day T-bills yielded 18-22% across 2025.

How CBN quotes T-bill returns. Discount rate × tenor gives you the gap between purchase price and face value — NOT your true annualised yield. Yield is always higher than discount rate.

How long the T-bill runs. CBN auctions 91-day, 182-day, and 364-day tenors fortnightly. Longer tenor usually = higher yield; you trade liquidity for return.

CBN's Monetary Policy Rate. The risk-free policy rate that anchors T-bill yields. When MPR rises, T-bill rates rise. Currently 27.50%.

CBN-issued bill used for Open Market Operations to mop up liquidity. Sold mostly to banks and offshore investors at auctions separate from NTB. Yields can be higher than NTB for the same tenor.

Rate banks pay each other for overnight collateralised borrowing. Tracks MPR closely. Repo spikes signal a liquidity squeeze in the banking system.

Federal Government of Nigeria local-currency bond. Tenors run 2-30 years, pay semi-annual coupons. Issued via DMO auctions. Coupon income is tax-exempt under CITA.

Nigerian government USD-denominated bond. Pays USD coupons, redeems in USD. Yields trade well above US Treasury yields to compensate for sovereign risk.

Fixed periodic interest payment on a bond, quoted as % of face value. A 16% coupon on a ₦1M FGN bond pays ₦80K every 6 months. Independent of current market price.

Yield to Maturity — the total annualised return if you hold the bond to maturity, accounting for coupon AND price gap to face value. The true comparable yield across bonds.

Approximate % price change for a 1% move in yields. A duration of 5 means the bond drops ~5% if yields rise 1pp. Longer bonds = higher duration = more rate sensitivity.

Nominal yield minus inflation. A 20% T-bill in 30% inflation gives -10% real yield — you're losing purchasing power. Critical metric in Nigeria's high-inflation regime.

Year-on-year change in the consumer price basket, published monthly by NBS. Drives CBN's MPR decision. Nigerian headline inflation has averaged 20-30% across 2023-2025.

Plot of yields against tenor. Normal curve: longer tenors yield more. Flat: market sees rates falling. Inverted: rare in Nigeria, signals recession in DM economies.

Money Market Fund — a pooled vehicle that buys short-dated T-bills, OMOs, and bank placements. Daily-priced, no lock-up, yields ~MPR minus 1-2%. Distributions are taxed (10% WHT).

Earning interest on previously earned interest. A 20% annual return doubles your money in ~3.5 years if you reinvest. Time is the multiplier you can't shortcut.

Risk that the issuing government defaults or restructures debt. FGN Eurobonds carry it; FGN naira bonds technically don't (CBN can always print naira) but face inflation risk instead.