Regulatory Alerts2011-05-03 | FMD/DIR/CIR/GEN/01/001Guidelines for the Use of AMCON Bonds in CBN Operations
The Central Bank of Nigeria (CBN) has issued guidelines allowing Government-guaranteed zero-coupon bonds issued by the Asset Management Corporation of Nigeria (AMCON) to be used as collateral in its operations. The guideline details pricing, eligibility and limits, initiation, and settlement process for utilizing these bonds within CBN's operations. The haircut method is applied to compensate the CBN for the risk that the value of securities could fall during the period of the repo, with a 5% haircut for repos less than 30 days and a 10% haircut for those between 31 and 90 days. The discounted price is credited to the bank's account at the CBN, and at maturity, the bank's account will be debited with the repayment amount and securities credited back to the bank's account at the CSCS.