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Pension Fund Managers abandon Nigerian Treasury bills

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The pension fund manager redeemed 512 million naira treasury bills within two months, but did not invest any additional kobo in the treasury bills during the same period.

Pension fund asset allocation: In the end, FGN bonds are still the highest asset type allocated by pension fund managers. As of February 29, 2020, of the total asset value of N10.5 trillion of pension funds, N5.6 trillion was deposited with FGN bonds, while bank placements ranked second with a distribution of N1.48 trillion. The asset allocation is N1.37 trillion.

With this development, the proportion of pension fund managers allocated to Treasury bills now reaches 13%. This is the first time in five years that PFM has avoided Treasury bills.

If the pension manager paid 420 million guilders, then love seems to have been transferred to the banking industry, which attracted more investment. FGN bonds continue to maintain friendly relations with pension fund managers, as they together injected an additional N352 million into FGN bonds in January and February. This seemingly redistributive arrangement shows that pension fund managers want to keep their cash while waiting and hope that the rate of return will rise in the near future.

Yield analysis: Due to the low yield of Treasury bills, fund managers who are seeking ways to create positive Alpha or income for their investors are escaping. The last Treasury bill options issued on May 13, 2020 for the 91-day, 182-day and 364-day Treasury bills had stop-loss rates of 2.5%, 2.85% and 3.84%, respectively. These interest rates are not enough to attract fund managers.

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Strong market demand: This does not mean that Nigerian Treasury bills are no longer needed, because according to the NTB auction results table on May 13, 2020, all three Treasury bills were oversubscribed.

The issue price of the 91-day Treasury bill is N4,384,80,000, but it has attracted a total of N22,334,588,000 subscriptions, while the issue price of the 182-day Treasury bond is N12,920,900,000, with a subscription price of N41,194,993,000, and the investor bid is N102. The 364-day period is 1,030,671,000 and the price offered is N16,536,720,000.

The Nigerian Pension Board ’s analysis of the recently released summary of pension asset data for the first two months of 2020 shows that pension fund managers no longer fall in love with national debt as they used to.

At that time, it was time for fund managers to allocate most of their assets to Treasury bills, but as Treasury bill yields fell below zero, this seemed to be weakening.

The Nigerian Pension Board ’s analysis of the recently released summary of pension asset data for the first two months of 2020 shows that pension fund managers no longer fall in love with national debt as they used to.

At that time, it was time for fund managers to allocate most of their assets to Treasury bills, but as Treasury bill yields fell below zero, this seemed to be weakening.

Photo by CreditDebitPro

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