Nov 6 (Lagos) - The effective yields on 1 year Treasury Bill is approaching 16% already and is likely to breach that mark very soon.
With the Federal Government giving commitment that the minimum wage will be increased to N 30,000, it will have to borrow even more money now. So T-Bills is a way for government to raise short term capital but at higher interest rates.
The Nigerian government spends a massive amount of money in paying its own salaries and upkeep like housing allowance, furniture allowance, kitchen allowance etc etc.
It has reached a stage where they have to borrow money to fund their lifestyle expenses and Treasury Bill market is a good place to raise that money.
With the yields rising so sharply, we can expect the mild rally in stock market today to come to an abrupt end shortly as money will go out from stocks into t-bills.
reporting for easykobo.com on Tuesday, Nov 6 2018 from Lagos, Nigeria