enyewe eapc are douches....the board has refused to allow the purchase of any form of hedging products,there is no company in east africa that has been offered a myriad of hedging options as has eapc...simplest option indeed wud be a currecny swap...but then again this is eapc...hey while on the topic of hedging fcy loans..how is it that kengen never seem concernd about their fcy loans?

what has their being government owned hav do with anything?they hav little choice on this matter

@ Kizee. I think KenGen did have some problems with the fcd loans particularly in 2009...the same Yen denominated kind,but swept them under the rug with a change in accounting policies. They made adjustments to a new reserve in the BL where they put all currency losses,maybe EAPC should consider doing that. This way they can disguise losses and only recognise forex changes (from other stuff unrelated to borrowings) on the P&L. But I remember hearing that the Japanese lenders had put restrictions on the amount of the debt that could be repaid each year (by EAPC),so maybe that's why they came up with the current bond thing. But the this particular bond promises no claims to future cashflow generating activities,I don't see why people should buy into it at all.

The process by which banks create money is so simple that the mind is repelled.

would definitely question the timing of the hedging....dude loan has another 11 years to go so the issue of timing is moot

Questions have been raised for quite a while why EAPC did not adopt a hedging strategy earlier. It appears they are going to do it at a time when the Yen is near its all time high against the shilling. They should have been buying Yen when the shilling was at its strongest e.g. during the Safaricom IPO. After all in early 2008,they had seen the shilling getting hammered after the PEV..that was then and this is now...the jpy/kes rate is not at an all time high despite what you hav heard...only God or nostradamus can confirm this..

The likelihood of the Japanese Yen depreciating going forward is higher than even,as risk appetite increases around the world and emerging currencies get back their oomph (as they have already done to some degree). ...eh dude...japans economy was the least leveraged of the G7 and is expected to recover fastest...infact thir Q3 gdp was positive...weak jpy-i dunno...

I trust however that EAPC is not going to actually convert all the proceeds of the converible bond in one go - or else they may be setting themselves up for more misery once the shilling begins to appreciate. ...eh dude if they convert it all to jpy they actually smile wen jpy gains again kes..the reasonin is u hav a jpy x loan...hedge against a jpy asset of x amount...



As for KenGen,they argue that they are shielded by the terms of the power purchase agreement -really?

@mwanahisa has it down pat. What EAPCC should look at is the potential for FUTURE appreciation of the Yen vs KES...

Forget about the past... the Yen is very,very strong but can it stay that way? I think Japan's economy will slow relative to Kenya. Japan remains an export powerhouse but is challenged by S.Korea & China. Over time this will affect the Yen.

I think the hedging is the wrong move. EAPCC will have to pay high rates for a local bond (vs 2% for the Yen loan) & could still be hurt on the exchange 'loss'

Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB