awesomeJ:
We'll only get to know as more people share experience.

cooldudeng:
The below rate schedule was culled from an investment bank mail as at last week. It will be great if someone can help share more light on the below

Bond Tenor (Years) Offer (%) Coupon Rate (%) Implied Price (N)
Feb-20 2 12.50 15.54 104.55
Jul-21 3 13.40 14.50 102.71
Jan-22 4 13.35 16.39 108.57
Mar-24 6 13.40 14.20 103.11
Jan-26 8 13.30 12.50 96.18
Mar-27 9 13.40 16.29 114.64
Jul-34 16 13.20 12.15 93.01
Mar-36 18 13.25 12.40 94.19
Apr-37 19 13.20 16.25 121.01


Using the Feb - 20 bond as an example, I would like to really understand how the bond work

Below is my basic understand and do correct me if I'm wring

" This is a bond that must have been issued at a unit price of N100 on March 2018 (since tenor is 2 years)
" Coupon rate is 15.54% meaning, N15.54 will be paid in a year per each unit held. This I believe will now be bi-annually at N7.77 with the first payment due in August ( 6 months after)
" For one to buy into it now, you will have to buy at the implied price of N104.55 per unit, hence at a premium

What then does the offer (%) mean? Are all my assumptions above correct?

awesomeJ:

All your assumptions are very correct sir.
The offer (%) should be the yield to maturity.

I will try to crunch the numbers tomorrow to show how the implied price was obtained.

awesomeJ:
So I was on the phone with a rep from one of the PDMMs (Stanbic IBTC) this morning.

I asked her for the procedures for buying FGN BONDS, saying emphatically that I meant FGN BONDS and not FGN savings bonds.

She put me on hold for about 5 minutes.

Thereafter she resumed the call to tell me that all I needed to do was pick up an application form from my relationship manager, fill up and submit.

I already figured that out based on my experience with T-bills purchases.

What I actually wanted to know more was their threshold. So I asked "what's the minimum investment I can make"
She responded by saying "N5,000.00"

I reemphasized to her that I was inquiring about the regular FGN bonds with 5 ,10 year tenor and not the savings bonds. I also asked if she could reconfirm as some changes were made to bonds investing last year, she said again "the minimum is N5,000.00"

I just concluded that perhaps all she did while she put me on hold was read up some outdated stuff, as against putting a call through to someone in Treasury that I expected.

Anyways, I'll make some more calls, and Gaverelino123 has promised to visit his bank next week. We await his feedback.

I'll try putting up the phone contacts of some of the primary market dealers so some other forumites can also try reaching them.

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.

engrkaz:
That's the minimum investment for stanbicibtc money market, which of course invests in Bonds, Certificate of deposits, Tbills and other government instruments. When I subscribed, it was 100k minimum. I got a mail from them around last year that they've reduced it to 5k.

gantic:


Most firms would allow you access to Dollars at the interbank rates for purchase of Eurobonds. Typically $200k but some would allow you buy into a pool alongside other investors.

Illiquid if you do not have a full $200k investment because of complexities trying to pull out your share of the pool.

Good to hedge against FX movement if you have future foreign outlay planned for education etc.etc.

mdgreen:
Hello to all the investors in house, I really want to know the best investment to involve into between stanbic mutual funds, fgn bonds and tbill, really want to make some cool money since business right now is not stable due to the economic. Lastly what I don't understand about fgn bonds, if I apply for the five years bond,it mean I will be paid instanct interest of the five years or yearly interest paid to me, or I have to choose how I can get my interest either monthly, quarterly, or yearly.?

MabraO:
Too many big big grammar on here.
Op don’t forget there re people who are hearing this for the first time.
Me think this thread is targeted at those who know about this bond investment..
I was expecting some basics for new beginners, minimum amount someone knowing about it can start with not the 50m and $200k, 9m flying around. Does it mean a poor man can’t invest in FGN bond or state bond?

ernie4life:


let me help you out.

Bonds are long term investments that usually last for more than a year.

There are different types of bonds depending on who is offering the bond and in what denominations example
FGN bonds
FGN savings bonds
Euro bonds(offered in dollars) but I think for this thread we are dealing with only FGN bonds not FGN savings bonds

Usually with a s little as 10k you can buy naira bonds.

Bonds pay a coupon which you can call interest.

usually this coupons are paid twice a year,
so lets say you buy 10k worth of 5 years FGN bonds at a coupon of 12% per year
that means every 6 months you will be paid 6k which represents 12% per year for the next 5 years,
after the 5 years you will get back your 10k

where can you buy bonds? banks, stockbrokers and asset management firms. log on to www.sec.gov.ng to see full list

Bonds are sold in two market, primary and secondary markets.

what if you want your money back before the end of the 5 years?
sure you can have your money back, it would be sold to some other person who wants.

let me stop here oga,s in the house should continue ,

can someone else open a thread for Euro bonds and copy me please

daewoorazer:
Please experienced peeps,

Which is the best?
Eurobond, FGN bond et al??

I’m new here and this sounds promising

sefani:
Nice thread.
can someone be kind enough to explain how I can buy an FG bond of 100k from the secondary market for 5 years and what my interest per year will be.
I am a newbie please

cooldudeng:


Thanks! Would be looking forward to it. What is the offer % about?

cooldudeng:


Thanks! Would be looking forward to it. What is the offer % about?

cooldudeng:


Thanks! Would be looking forward to it. What is the offer % about?

evalasthn:
Thank you so much guys for this thread
Is their any better bank investment than this?
Do you guys think this is really a good investemt because the marketer that sold this to me made me understand that its the best i cant get out there.

exi
I plan on increasing higher than 3m but after reading this thread am dragging my feet again

awesomeJ:

For bonds, what you should really ask is what your returns would be.

Let's say, you buy a bond with a face value of N1000 and 16% coupon at a 12% yield, you will get interests of 160,000 yearly on every 1000 units you hold. But what you'd pay to get those 1000 units would me more than 1m (which should be the normal cost)
You'd rather be paying 1.33m to get interest of 160k per year.

So if you could get bonds with 100k at say 13.5% yield, your returns would be #13500 every year.

awesomeJ:

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....