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uganda tbills and tbonds - to indulge or not?
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kiwaru
#1 Posted : Sunday, March 20, 2016 11:27:58 PM
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Joined: 8/5/2011
Posts: 125
Am seeing rates above 20% for 2 yr Uganda Central bank tbills/bonds. That looks like a steal.
I am thinking of putting in a chunk (KES 4M - sourced from my sacco at 12%), and then I make kitu 800k p.a. before taxes, sacco interest expenses. I am Kenyan, based in Nairobi

1. Is it a steal, or am I overlooking some unsaid pitfalls?
2. Are there primary or secondary risks associated?
3. Who (bank or stock-broker) can I engage to enable me to pick this 'low hanging fruit'?
4. Will I be able to repatriate my capital and profits back to Kenya?
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Mike Ock
#2 Posted : Monday, March 21, 2016 12:24:16 AM
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If true, then the big boys from all over the world have probably begun circling and it will be hard to get in so late without big buy in.
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alotoftalk
#3 Posted : Monday, March 21, 2016 2:59:33 AM
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Joined: 8/27/2015
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Location: Harare
This is a typical carry trade. May work, or may not depending on whether it's a pure arbitrage after accounting for forex differences and expected currency depreciation in that 2 years.
Investment philosophy development in progress...
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maka
#4 Posted : Monday, March 21, 2016 5:38:32 AM
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Joined: 4/22/2010
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Location: Nairobi
Isn't WHT in UG at 20%? comes fairly to around the same bet levels to some bonds that you would get again the Kenyan secondary market and the hustle...too much.
possunt quia posse videntur
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guru267
#5 Posted : Monday, March 21, 2016 7:08:31 AM
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Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
Two words for investing in Uganda.... Forex Losses!
Mark 12:29
Deuteronomy 4:16
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moneydust
#6 Posted : Monday, March 21, 2016 9:38:15 AM
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Joined: 1/31/2007
Posts: 304
kiwaru wrote:
Am seeing rates above 20% for 2 yr Uganda Central bank tbills/bonds. That looks like a steal.
I am thinking of putting in a chunk (KES 4M - sourced from my sacco at 12%), and then I make kitu 800k p.a. before taxes, sacco interest expenses. I am Kenyan, based in Nairobi

1. Is it a steal, or am I overlooking some unsaid pitfalls?
2. Are there primary or secondary risks associated?
3. Who (bank or stock-broker) can I engage to enable me to pick this 'low hanging fruit'?
4. Will I be able to repatriate my capital and profits back to Kenya?


Watch out for currency devaluation..it can cost you everything..
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kiwaru
#7 Posted : Monday, March 21, 2016 11:07:36 AM
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Joined: 8/5/2011
Posts: 125
thank you people - starting to get the picture. I am wondering how bad the forex issue can get.
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Impunity
#8 Posted : Monday, March 21, 2016 1:16:33 PM
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Joined: 3/2/2009
Posts: 26,328
Location: Masada
kiwaru wrote:
thank you people - starting to get the picture. I am wondering how bad the forex issue can get.


Last year in October .ke Tbills were at 24%...for UG I would eneter is 30%...20 is still tooooo low!

And will you do the transaction with our local brokers?
How first will the Sacco give you the loan?
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Mike Ock
#9 Posted : Saturday, June 25, 2016 2:58:13 PM
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Joined: 1/22/2015
Posts: 682
Hey guys. I'm thinking of sinking 10m here cash, on the 3 month option at 16%. Advice?
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Plimsoul
#10 Posted : Saturday, June 25, 2016 4:28:36 PM
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Joined: 3/3/2016
Posts: 132
Mike Ock wrote:
Hey guys. I'm thinking of sinking 10m here cash, on the 3 month option at 16%. Advice?


Just keep in mind that withholding tax there is at 20% compared to Kenya's 15%, maybe 10% over 10 years, and tax free for infrastructure bonds.

Remember also the currency commissions changing to UGX and back again. I don't know why bank spreads are so large.
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