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home > business banking > treasury bills >
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Overview
If you are looking for guaranteed returns, tax-free, and low risk, invest in treasury bills through Nedbank. Minimum investment of N$10 000 and multiples of N$10 000. The initial investment is discounted with face value payable at maturity.
Treasury bills are issued by the Bank of Namibia, the country's central bank, on behalf of the government to finance a portion of the state's capital expenditure. You buy your treasury bill at a discount and the Bank of Namibia guarantees to refund you the full face value of the bill.
- Secure – government securities are generally regarded as the safest form of investment
- Flexible – treasury bills are short-term investments, available over periods of 91, 182 and 365 days. You choose the period that suits you. The minimum investment is N$10 000 or multiples thereof
- Tax-free investment for individuals, but not for companies
- Liquid – treasury bills are easily bought and sold in the secondary market, so you can realise your investment quickly, if you need to. Maturity periods can be shorter in the secondary market
- Fixed rate – means your investment is protected against decreasing interest rates in the period
Rates for treasury bills are available from any Nedbank relationship banker and are subject to availability.
Treasury bills are just one of the investment options from Nedbank. Talk to your relationship manager today about these and other investments – because we're serious about service.
Example of treasury bill calculations
Nedbank quotes investors on a yield basis.
It is necessary to calculate the discount rate to calculate the price an investor needs to pay to receive N$10 000 on maturity.
Price + interest = face value (printed on bill)
Face value – price = yield (also known as interest or capital gain)
Discount rate
- (36 500 x yield)/(36 500 + (yield x days to maturity))
- A yield of 9.00% for 91 days has a discount rate of 8.80%
- An increase in days to maturity will decrease the price and discount rate
Price
- Amount invested today to receive face value on maturity date
- Because this is the amount invested, the yield should be calculated on the price
- Face value – (face value x discount rate)/365 x days
- A bill of N$10 000 at a yield of 9.00% for 91 days will cost N$9 780.60. (Discount rate is 8.80%)
Interest/Discount
Face value – price = interest/discount.
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