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2nd Government Infrastructure Bond
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drake
#1 Posted : Monday, November 16, 2009 7:28:00 PM
Rank: Member

Joined: 8/8/2009
Posts: 170
Looking to raise Ksh 18,500MM to 'build dams' among other noble causes.

Tenor: 12yrs
Min Amt: 100K
Coupon : 12.00% s.a
Tax: Tax Exempt
Redemption November 23rd,2015 – 49% of outstanding principal amount
November 19th,2018 – 53% of outstanding principal amount
November 15th,2021 – Final redemption of all outstanding amounts
Bids Closure: Tuesday 2.00p.m,November 24,2009
2ndary Tradng: Multiples of Ksh 50,000 from December 1st 2009*

*No mention of whether bond will be on ATS






http://www.centralbank.g...strucuteBond/2ndIFB.pdf




It often happens that a TRADER carries out a deep and complicated calculation,but fails to spot something elementary right at the first move!
drake attached the following image(s):
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  | | Edit by moderator: Monday, December 14, 2009 8:50 AM | Reason: Not specified
ecstacy
#2 Posted : Monday, November 16, 2009 8:31:00 PM
Rank: Elder

Joined: 2/26/2008
Posts: 4,449
Thanks for the info.

The interest on this bond is 12.00% p.a. payable semi-annually on outstanding principal amount.

As I have successfully done before as a young investor not a pensioner,willing to take on more risk while seeking the best return on my investment,I will 'bet' against this bond by investing in select equities.

I bet that come 29/11/2010 when the second semi-annual payment for 2010 will be done,I will have made a notably higher return by investing today in SCOM,HFCK or KQ. You could do your own research for your preferred select stocks here. These returns will be tremendously higher if I choose to hold out to the lifetime of the bond.

Who said investing is boring? About the bond guaranteed return,how about use of a stop-loss in the equity counter when in a profit position?...think about it

My 2 Cents.
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Ali Baba
#3 Posted : Monday, November 16, 2009 11:06:00 PM
Rank: Member

Joined: 8/29/2008
Posts: 573
People who invest in bonds invest for income.Those who invest in equities invest for capital gains.Big difference in attitude.Its like one is dairy farmer and the other cattle/beef farmer.The daily farmer has consistent income.Cattle/beef farmer waits for his bulls to mature and slaughters them for capital gains.ECSTACY,you can't convince a dairy farmer to change to beef farming.So,let the bond investors do their thing.

Ali Baba
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ecstacy
#4 Posted : Monday, November 16, 2009 11:32:00 PM
Rank: Elder

Joined: 2/26/2008
Posts: 4,449
well...my guy,try look at it this way...going by thread updates,there are many on SK who simply want to make money but have adopted a 'don't try to beat the trend' attitude unless... that is your typical nonchalant young-middle aged SK audience on herd mentality reading this thread not some white haired rich wazee farmers surfing SK...
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drake
#5 Posted : Tuesday, November 17, 2009 12:18:00 AM
Rank: Member

Joined: 8/8/2009
Posts: 170
@ all
True,but portfolio theory stresses the need to invest in both Equities and Fixed Income securities/products......BUT to vary your asset allocations accordingly,vis-à-vis what stage of cycle you're in,for an optimal risk-return relationship.

@ Ali-Baba
Capital gains from bonds are not entirely unheard of.
It often happens that a TRADER carries out a deep and complicated calculation,but fails to spot something elementary right at the first move!
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Ali Baba
#6 Posted : Tuesday, November 17, 2009 12:48:00 AM
Rank: Member

Joined: 8/29/2008
Posts: 573
Drake,that's correct. Yes,but mostly bond investors do it for income.However,interest rates determine the price at which it maybe re-sold at the stock exchange.

ECSTACY,Most bond investors also invest in equites.Myself,I do both.


Ali Baba
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VituVingiSana
#7 Posted : Thursday, December 03, 2009 5:28:09 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,346
Location: Nairobi
Average rate in 12.57% (tax-exempt)... Oversubscribed...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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KulaRaha
#8 Posted : Thursday, December 03, 2009 6:45:49 AM
Rank: Elder

Joined: 7/26/2007
Posts: 6,514
This bond received 43B (YES, 43B) worth of bids!!!!! That is absolutely crazy money.

But, this tells us 2 things:

1. GOK is paying over the top interest
2. Banks have started the old 90s games, put money in bonds/bills and stop lending. This is bad for the economy.
Business opportunities are like buses,there's always another one coming
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VituVingiSana
#9 Posted : Thursday, December 03, 2009 7:23:01 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,346
Location: Nairobi
@kularaha - The bids were not backed by cash but guarantees so there is an element of 'over-applying'.

During safcon, many investors went & got bank guarantees for 100% more than the cash they had... so as to get a larger allocation...

(Many were chomeka'd is a different story)

Even for bonds... what you do is get a bank guarantee for MORE than you actually want/can buy e.g. guarantee for 10mn lakini you have only 5mn in cash. Of course, if you are allocated the full 10mn... The bank has to pay up the difference & then it will thwack you! LOL...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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VituVingiSana
#10 Posted : Thursday, December 03, 2009 7:27:42 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,346
Location: Nairobi
A huge portion of the applications are from Insurance Firms.
Strong ones can easily (& cheaply) get bank guarantees. Some insurance firms have banks as hubbies:

CFC Life & Heritage = CFC Stanbic Bank
General Accident = I&M Bank (Siblings)
ICEA = 'Come We Stay' with NIC Bank (ndegwas)
Jubilee = Diamond Trust (Aga Khan's babies)
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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