its better than what many insurance co's are giving. Plus if you have the cash and don't feel like playing the market, why not. As @ 2012 said if you have 2m, then you've got school fees for some good school.

Ati 15%? And you'll still expect banks to give mortgages at below 15% while they can put it here where there's guaranteed returns?

I personally don't think it's too bad after all and if I'm not wrong if you compound 1m at 12.5% x30yrs it's well over 30m. Fantastic way to save for retirement ama?

though rental income will not remain static for the next 30years, the coupon however will

theres also a risk that in 30 years teh country u know as kenya may cease to exist.....if u think im talkin nonesense ask the guys holdin the ivory coast euro bond..this argument is not about risk per se..its about return

@ All
I tend to agree with @ Kizee1. 12% is TOO low for 30 years.
If you look at the latest 10 year bond dated 31/1/2011, the coupon was 9.307%. However the yield was higher at 9.683%.
Interesting fact was that bids were 17,694 Billion. However CBK only accepted 1,086 Billion. That is only just over 6% of bids !!!

Why. I think investors have seen that the government is hungry for local funds. The investors sense this and putting in higher bids.

If you look at the 91/ 182/364/ trend, yields have been going up since Oct. 2010.
I dont see this trend changing any time soon.

Also dont forget that in 2008, 182 day bills were paying about 9%

It IMO that the 30 year bond will have a lot of bids, but CBK will only accept a very little proportion. Unless it is in dire needs of funds.

Which ever way it goes the coupon is 12%, but the actual yield will be much higher - maybe 14%.

I think in a few years, we may see 2 year bonds giving 9% yields.
My 2 cents - though I manage a few clients who invest with CBK.