I think Eurobonds is targeted at foreign institutional investors. For a Nigerian to have $200K in his/her dom account, it will likely attract the attention of EFCC because the bank will have to report it.

Agbaletu:

200K$ is a lot of money.
Can one invest in Eurobonds with $ dom account? There is a need to know the current minimum amount they accept.

Kolping:
That's a lot of money for an individual.

Yet the yields are less than 8%. Its biggest positive is the shield it offers against local currency volatility. Dorm accounts offer that too but with little or no interest earnings.

If one has small amounts of forex, best to keep it as cash. The banks take charges for every dom account withdrawal. It's not worth keeping it in the account unless you want to make an immediate payment abroad, e.g. school fees, hospital bills, trade payment etc.

awesomeJ:

Yet the yields are less than 8%. Its biggest positive is the shield it offers against local currency volatility. Dorm accounts offer that too but with little or no interest earnings.

Kolping:
I think Eurobonds is targeted at foreign institutional investors. For a Nigerian to have $200K in his/her dom account, it will likely attract the attention of EFCC because the bank will have to report it.

I think it's only a lump deposit or transfer that exceeds $10,000 that gets reported to the Financial Intelligence Unit.

In the long term, our aim is to have much more than the 200k.

Oh ok.

Yes, I agree. One should target investment that can yield at least 500,000 Naira a month as coupon payment.

awesomeJ:

I think it's only a lump deposit or transfer that exceeds $10,000 that gets reported to the Financial Intelligence Unit.

In the long term, our aim is to have much more than the 200k.

Agbaletu:

200K$ is a lot of money.
Can one invest in Eurobonds with $ dom account? There is a need to know the current minimum amount they accept.

You should be able to fund a Eurobond investment from your dorm if your dealing through a bank. However if it's through a brokerage or investment house, you'll have to transfer the forex.

And lest we forget, the $200k is just for one firm. There may others that'll take from $10,000. I'll make findings and give updates.

Kolping:
Oh ok.

Yes, I agree. One should target investment that can yield at least 500,000 Naira a month as coupon payment.

40m in bonds at 15% coupon will return 6m yearly. That's 3m every six months and 500k monthly.

And as long as you're willing to hold the bonds, rates won't fall ( won't rise either though)

Yes, within that range. It's a good target to aim for with a minimum tenor of 5 years. Of course, one would still have other income bearing investments like stocks which yield income in form of dividends.

As Warren Buffett said, If you don't find a way to make money while you sleep, you will work until you die.

awesomeJ:

40m in bonds at 15% coupon will return 6m yearly. That's 3m every six months and 500k monthly.

And as long as you're willing to hold the bonds, rates won't fall ( won't rise either though)

Kolping:
I think Eurobonds is targeted at foreign institutional investors. For a Nigerian to have $200K in his/her dom account, it will likely attract the attention of EFCC because the bank will have to report it.

Do you mean a lump sum deposit or I can't have up to 200K$ in my dorm account?

awesomeJ:

You should be able to fund a Eurobond investment from your dorm if your dealing through a bank. However if it's through a brokerage or investment house, you'll have to transfer the forex.

And lest we forget, the $200k is just for one firm. There may others that'll take from $10,000. I'll make findings and give updates.

Thanks, will be looking up for the updates.

awesomeJ:

40m in bonds at 15% coupon will return 6m yearly. That's 3m every six months and 500k monthly.

And as long as you're willing to hold the bonds, rates won't fall ( won't rise either though)

Wow this is great.

I'm thinking of a lump sum deposit. I would say that if I have $200,000 it wouldn't be sitting in a Nigerian bank.

Agbaletu:

Do you mean a lump sum deposit or I can't have up to 200K$ in my dorm account?

Kolping:
I'm thinking of a lump sum deposit. I would say that if I have $200,000 it wouldn't be sitting in a Nigerian bank.

Thanks for the clarification.
Why wouldn't you leave it in Nigerian bank? I am very curious. What if the amount is 100K$?

So many reasons. One being the risk factor.

Agbaletu:

Thanks for the clarification.
Why wouldn't you leave it in Nigerian bank? I am very curious. What if the amount is 100K$?

awesomeJ:

I guess we'll have to contact each dealer to be sure of their specific rules.

Remember even when T-bills minimum was 10k, Zenith wouldn't let you buy with less than 1m.

This is not bank related, got it from DMO website. Even if they vary the margin should not be farther than necessary like 100k which is not bad. Tbills minimum is at 50m so banks only help bring investors together hence their rules. They cannot take minimum above 50m likewise in bond, they can't take the minimum above CBN set point. Correct me please if my thoughts are wrong. Am still learning from people like you poop. Thanks

GODAKPAN:


This is not bank related, got it from DMO website. Even if they vary the margin should not be farther than necessary like 100k which is not bad. Tbills minimum is at 50m so banks only help bring investors together hence their rules. They cannot take minimum above 50m likewise in bond, they can't take the minimum above CBN set point. Correct me please if my thoughts are wrong. Am still learning from people like you poop. Thanks

Sure, Low threshold is what we want as retail investors.

Also, given the long term nature of bonds. Easy access to the secondary market is what we seek.

Talking about the secondary market. I want to point out the following:

1. To trade bonds on the NSE, you need an account with a dealing member (a broker that is)
I'll try making bids for some bonds on the NSE this new week just to determine the accessibility and liquidity levels of the NSE bond market. If this works out fine, it may be better to buy here than through banks, basically for easy entry and exit. Only downside would be that the juiciest bonds may not be listed or not have offers. Also, one would still need the banks and discount houses for purchases at the primary market bond auctions.

2. To trade bonds or any other instrument on the FMDQ OTC, you need to be a member. Their membership is in diverse categories, but I think Individuals can only join as affiliate members. The current members are few and mostly institutions. Asset managers, PFAs, banks, discount houses, and the CBN.
If you were to trade an instrument on this exchange, you'd most likely be buying from or selling to one of these big guys, and transaction values may have to be in billions.

Besides, the application form for being an individual affiliate member costs over 100k, and it's not refundable. And you pay yearly membership fees that exceed 250k. Despite these fees, you may yet not get to trade every instrument on the exchange either due to having limited access or having limited funds.r

So what I'm thinking is if I have an account with one of these institutional members, perhaps I can get them to trade bonds on this exchange for me for a small brokerage fee.

3. The interbank market. First I'm not so sure this market exists or if it's accessible to retail bond investors. But if it does, and is, I expect its workings to be like that of T-bills. Meaning that to buy, you approach your bank on any business day to pick from available offers, and to sell, the bank buys from you at a higher yield, or the prevailing market yield.

Check out the updated brokers list here

I enquired from my account officer at FBN about the Eurobond minimum investible amount and he said its $100k

awesomeJ:

I once learnt that the minimum investment for Eurobonds with Investment One Financial Services is $200k (N72 m).

I'm sure with time, we'll find out more about other investment houses.

Hi all, I tried to make this point on the tb thread, my thinking and (one time experience) is that unless a bond is just being issued for the first time, one may not be able to obtain it at face value. Any rollover issue of the bond or obtaining at secondary market (stock exchange) is usually at a premium (might not always be the case though).I will still wait to learn from all your findings.

I'm interested.

I need to divest a little from equity and money market instruments
Let me be observing

Jessglam:
I enquired from my account officer at FBN about the Eurobond minimum investible amount and he said its $100k

That's serious! It seems Eurobonds is not meant for the hustlers.

Just2endowed2:


How do one get corporate bonds

Depends on the cooperation offering it. Usually you bid to the company or its delegat but note you have to make your due diligence and ensure such coy can fulfill its obligation at maturity and the longtivity of the coy. Recently visionscape offered bond at 17-20% effective yield.

awesomeJ:

You should be able to fund a Eurobond investment from your dorm if your dealing through a bank. However if it's through a brokerage or investment house, you'll have to transfer the forex.

And lest we forget, the $200k is just for one firm. There may others that'll take from $10,000. I'll make findings and give updates.

The global minimum principal that is allowed to purchase an Eurobond is $200k but houses and banks have their way of purchasing for clients with lesser capital. They either make a pool or trade on a buy back .

Agbaletu:

That's serious! It seems Eurobonds is not meant for the hustlers.

Well thank God their own is lower. As more people post updates, we may find a place where they'd take our $10-50k.

Jessglam:
I enquired from my account officer at FBN about the Eurobond minimum investible amount and he said its $100k

Thanks for the info. Could you please ask for the minimum for FGN bonds?

Sach:
Hi all, I tried to make this point on the tb thread, my thinking and (one time experience) is that unless a bond is just being issued for the first time, one may not be able to obtain it at face value. Any rollover issue of the bond or obtaining at secondary market (stock exchange) is usually at a premium (might not always be the case though).I will still wait to learn from all your findings.

Sure.
The probability of buying a bond at its face value is the same as the probability of buying secondary market T-bills at their original discount rates( not so likely)

But secondary market bond purchases don't always happen at premium prices. Look at the snapshot on the previous page of the past auction's result, the 12.75% FGN APR 2023 bonds were sold at a discount (yield at 13.5%). However, the two other bonds were sold at mild premiums.

Liljel:


Depends on the cooperation offering it. Usually you bid to the company or its delegat but note you have to make your due diligence and ensure such coy can fulfill its obligation at maturity and the longtivity of the coy. Recently visionscape offered bond at 17-20% effective yield.

Thank God for the rating Agencies. I may be skeptical on any bond with a rating below B+, but I'd be pretty much comfortable with those having B+ or higher.

I know ratings can be manipulated, but I don't think such practice is really prevalent.

Another gauge, is if most asset managers and PFAs are buying into a bond, it'd spell some more comfort for me.

That Visionscape bond, can you give us more info on it.
When did the auction take place?
How could retail investors like us have participated?
When/Where will it be listed,
What funding support do they have from the Lagos state government. (They're the clean Lagos initiative guys right?)

Liljel:


The global minimum principal that is allowed to purchase an Eurobond is $200k but houses and banks have their way of purchasing for clients with lesser capital. They either make a pool or trade on a buy back .

Just as banks helped us get around the 50m T-bills hurdle. I wish they'll do much regarding this $200k. $10k would make them more accessible.

awesomeJ:

Just as banks helped us get around the 50m T-bills hurdle. I wish they'll do much regarding this $200k. $10k would make them more accessible.

10 or 20K$ is still reasonable. I am also sure that banks will help us get a way out.

awesomeJ:

Sure.
The probability of buying a bond at its face value is the same as the probability of buying secondary market T-bills at their original discount rates( not so likely)

But secondary market bond purchases don't always happen at premium prices. Look at the snapshot on the previous page of the past auction's result, the 12.75% FGN APR 2023 bonds were sold at a discount (yield at 13.5%). However, the two other bonds were sold at mild premiums.

@awesome
Thanks for ur explanation so far but what is the difference between a coupon rate and yield
I see these two terms being used at secondary bond market for the same bond

Liljel:


Depends on the cooperation offering it. Usually you bid to the company or its delegat but note you have to make your due diligence and ensure such coy can fulfill its obligation at maturity and the longtivity of the coy. Recently visionscape offered bond at 17-20% effective yield.

give me link to thisvisionscope bond offerring

akinola98:


@awesome
Thanks for ur explanation so far but what is the difference between a coupon rate and yield
I see these two terms being used at secondary bond market for the same bond

Bonds are kinda sold in units with each unit having a face value.
so if you buy a 15% APR 2023 FGN bond with 10m at its original price, you'd be having 100,000 units of the bond, and since the coupon is 15%, your annual interest would be 1.5m

Now when you buy at the secondary market, you often don't buy at the original unit price. You may get to buy at say N90 per unit, which implies that you'd only be paying 9m to get thesame 100,000 units.

But at the end of the year, both you who bought at 9m and the other person that bought at 10m, you'd each get 1.5m as interest, because you hold the same number of units. But while his own yield is 15%(1.5m on 10m input), yours is 16.67%(1.5m on 9m input)

So coupon rate indicates the rate at which interest is paid on a bond based on its face value, while yield indicates the actual rate of returns to an investor.

The coupon rate is always indicated in the name of most bonds, and it doesn't change throughout the lifetime of the bond.

Only changes in purchase prices bring about changes in yields to bond investors.

Bonds bought at prices below their face values have higher yields, and vice versa.

Kindly ask for any further clarification if....