Alikote:
pls am yet to understand ...example if I purchase 10 million naira worth of the 2020 bond at the primary auction ,what will be the total interest paid by 2020 plus my initial investment....

Bros if you purchase N10M worth of FGN 2020 15.54%;

the coupon payment you will get bi annually is N777,000.

but like I stated before the price you pay for the N10M worth will depend on the Yield as at the time you purchased the bond.

Coupon is constant but the yields changes depending on some factors like Inflation, Interest rates, market liquidity etc..

castrokins:
Chairman Sir, If I Say I Understand This Narrative, Make I Sleep Sef.

He No Get How You Fit Use ''If A = 1, Then B = 2'' Scenario Make Laymen Follow Understand?? Biko!

hahaha...Bros at this rate you go need some special tutorial classes o!

feelamong:


Bros if you purchase N10M worth of FGN 2020 15.54%;

the coupon payment you will get bi annually is N777,000.

but like I stated before the price you pay for the N10M worth will depend on the Yield as at the time you purchased the bond.

Coupon is constant but the yields changes depending on some factors like Inflation, Interest rates, market liquidity etc..

O.K. thank you example the 10 m purchased I will pay 10.5 m for the bond but at the end of the duration will 10.5 or 10 m paid back

and lastly treasury bills and bond which is better

Alikote:
O.K. thank you example the 10 m purchased I will pay 10.5 m for the bond but at the end of the duration will 10.5 or 10 m paid back

and lastly treasury bills and bond which is better

10.5M in your example will simply be the price you pay for requesting to invest 10M. so at the end of the tenure/maturity, what you get back will be 10M. You might even pay up to 11.5M price in order to tie that 10M investment. Remember that your target is the coupon rates which is constant. As you must know, every good thing comes with a price.

Feelamong has explained in details.

@ feelamong

Thank ,..You've been of help to so many people....My question is What step can i take to avoid paying extra for yield as described above OR is compulsory i must Pay extra for the bonds.

Tritri:
@ feelamong

Thank ,..You've been of help to so many people....My question is What step can i take to avoid paying extra for yield as described above OR is compulsory i must Pay extra for the bonds.

if you want to avoid paying extra, you will have to wait until the yield is well above the coupon rate and you also have between 5 to 6 months to your next coupon payment when you buy the bond. If the yield is very high, you might even get it at a discount, which means paying less than face value.

unite4real:


10.5M in your example will simply be the price you pay for requesting to invest 10M. so at the end of the tenure/maturity, what you get back will be 10M. You might even pay up to 11.5M price in order to tie that 10M investment. Remember that your target is the coupon rates which is constant. As you must know, every good thing comes with a price.

Feelamong has explained in details.

bond vs treasury bill which is better

Alikote:
bond vs treasury bill which is better

Its a personal choice. TB is short term while Bond is Long term. TB interest is discounted while bond is not.

unite4real:


Its a personal choice. TB is short term while Bond is Long term. TB interest is discounted while bond is not.

a personal choice can be faulty ....need expert advice on which is better

Alikote:
a personal choice can be faulty ....need expert advice on which is better

there is no professional investment analyst in the world that will come to tell you which is better. Come to think of it, if professionals tell you that Bond was better, would people do TB, or if they say TB was better, will people buy Bond?

The response i gave you is universal. That is the best you will get.

unite4real:


there is no professional investment analyst in the world that will come to tell you which is better. Come to think of it, if professionals tell you that Bond was better, would people do TB, or if they say TB was better, will people buy Bond?

The response i gave you is universal. That is the best you will get.

Thank You for this explanation...

Moreover, it all depends on your Investment goals and Horizon..

personally I have a 5 years Bond Investment that the coupon is only targeted for paying my kids school fees for the next 5 years (hoping that the fees don't increase so much)...that way I don't have to break my any investment to settle the fees....

I also do a lot of TBills to keep funds that I know will soon be used for my business projects quite soon as my business is seasonal to a large extent.

feelamong:


Thank You for this explanation...

Moreover, it all depends on your Investment goals and Horizon..

personally I have a 5 years Bond Investment that the coupon is only targeted for paying my kids school fees for the next 5 years (hoping that the fees don't increase so much)...that way I don't have to break my any investment to settle the fees....

I also do a lot of TBills to keep funds that I know will soon be used for my business projects quite soon as my business is seasonal to a large extent.

Thats straight to the point. Exactly what i do as well. mix of bonds and TBs.

unite4real:


there is no professional investment analyst in the world that will come to tell you which is better. Come to think of it, if professionals tell you that Bond was better, would people do TB, or if they say TB was better, will people buy Bond?

The response i gave you is universal. That is the best you will get.

o.k let do a 5 years analysis of possible return on investment

I am planning on starting my treasury bills investment with capital bankcorp plc. Does any1 know how credible and versatile they are. Pls treat as urgent. Thanks

mekaboy:


It's actually 15% every year.

I'm intrested wen is the next bid

unite4real:


10.5M in your example will simply be the price you pay for requesting to invest 10M. so at the end of the tenure/maturity, what you get back will be 10M. You might even pay up to 11.5M price in order to tie that 10M investment. Remember that your target is the coupon rates which is constant. As you must know, every good thing comes with a price.

Feelamong has explained in details.

I have a question pls,if i invest sum of 5.5m to secure 5m TB. , at the end of tenure,i get 5m as profit or what?

Let us use the example of buying a house in an estate that is advertised at N10m. The value of the house is N10m but because people are rushing to buy the houses in the estate, the price shoots up to N10.5m simply because of oversubscription.
When you buy the house you pay N10.5m the new value because the value went up.
To make money you rent it out for the coupon rate 15.54% per annum . That is a good example to explain coupon rate.
Your tenants will be paying you 15.54% of the value of the house every year. That is your income annual income for being the landlord or TBA holder in this case.

If you want to sell your house it will probably be more than N10.5m because the face value would have jumped up again because people are still rushing it. Sometimes unfortunately it would have come down

Good morning, Oga feelamong and others, how do we calculate the extra money to be paid on the bond based on the present yield to make up the coupon rate.

betcindy:
I have a question pls,if i invest sum of 5.5m to secure 5m TB. , at the end of tenure,i get 5m as profit or what?

You have not stated interest rate and tenor, so one cannot do any calculation of simple interest here.

Adminisher:
Let us use the example of buying a house in an estate that is advertised at N10m. The value of the house is N10m but because people are rushing to buy the houses in the estate, the price shoots up to N10.5m simply because of oversubscription.
When you buy the house you pay N10.5m the new value because the value went up.
To make money you rent it out for the coupon rate 15.54% per annum . That is a good example to explain coupon rate.
Your tenants will be paying you 15.54% of the value of the house every year. That is your income annual income for being the landlord or TBA holder in this case.

If you want to sell your house it will probably be more than N10.5m because the face value would have jumped up again because people are still rushing it. Sometimes unfortunately it would have come down

guru thanks alot can rate fall below the intial investment on maturity example cause of low demand it become 9 million on maturity or it only effect the 0.5 m on the 10 million

Alikote:
guru thanks alot can rate fall below the intial investment on maturity example cause of low demand it become 9 million on maturity or it only effect the 0.5 m on the 10 million

yes it can fall below the initial Investment..

When the FGN 2020 bond was first issued, the bond yield was 15.54%. since its issued at par, this automatically becomes the coupon rate..

since then we have seen the yield rise to as high as 16% during the JP Morgan fear issues...(You know as yield rises, the price falls) so those who bought then bought at high yield and lower price (discount)

we have also seen the yield drop to as low as 10% (price rose) when there was too much liquidity....hence people who bought then bought at a premium..

That is why people trade on it! they try to buy when the yields are high (lower prices) and sell when the yields are low (higher prices)
In all this rise and fall of yields, The Coupon has not changed! what has affected the yield has been issues like demand and supply which are affected by a lot of other factors like Interest rates, Inflation, liquidity etc

feelamong:


yes it can fall below the initial Investment..

When the FGN 2020 bond was first issued, the bond yield was 15.54%. since its issued at par, this automatically becomes the coupon rate..

since then we have seen the yield rise to as high as 16% during the JP Morgan fear issues...(You know as yield rises, the price falls) so those who bought then bought at high yield and lower price (discount)

we have also seen the yield drop to as low as 10% (price rose) when there was too much liquidity....hence people who bought then bought at a premium..

That is why people trade on it! they try to buy when the yields are high (lower prices) and sell when the yields are low (higher prices)
In all this rise and fall of yields, The Coupon has not changed! what has affected the yield has been issues like demand and supply which are affected by a lot of other factors like Interest rates, Inflation, liquidity etc

Last September I bought at a yield of 15.95% shortly before TSA and during the JP Morgan news. Was glad to buy at discount.

Is the precent 12% on the yield a Good deal?

Tritri:
Is the precent 12% on the yield a Good deal?

For now 12% is a good yield if you get it...

I know some analyst in pensions funds who have told me they will only buy at 12% or more

Please i want professional guidance as to where to invest my 500k. I want to invest in treasury bills. Am confused cos i don't wether to invest with a bank or a broker. Pease advice.

unite4real:


Last September I bought at a yield of 15.95% shortly before TSA and during the JP Morgan news. Was glad to buy at discount.

thanks guru .I will study it further...how do we trade it?

Pls house I want to know if banks have the right to determine d amount I bid in primary market. All these while I've been purchasing from Ecobank secondary market, only for me to request for 182days @ 7.5% primary mkt n they refused. They said that instruction from their headoffice stipulated 6.5% or they'll not treat it.

sodiamond:
Pls house I want to know if banks have the right to determine d amount I bid in primary market. All these while I've been purchasing from Ecobank secondary market, only for me to request for 182days @ 7.5% primary mkt n they refused. They said that instruction from their headoffice stipulated 6.5% or they'll not treat it.

they are trying to sell to you from their books. If they give you a rate, then chances are that you are buying from the secondary market.

Place what do I do now. I don't know if it's the same with diamond bank as I intend to open account with them because of this

unite4real:


they are trying to sell to you from their books. If they give you a rate, then chances are that you are buying from the secondary market.

Ecobank is one of the worst banks in Nigeria.

otokx:


Ecobank is one of the worst banks in Nigeria.

True

Diamond bank do not alow individual bids. You go with bank rate. Its better at times tho.

otokx:


Ecobank is one of the worst banks in Nigeria.