₦airaland Forum

emmanuelewumi:
That is less than 1% na.

Which of the bonds did you buy?

How many units did you buy?

What was the clean price?

What was the dirty price?

When is the coupon payment date?

Please can you explain to me the meaning of dirty price and clean price and how it implies to FGN bond in the secondary market. The Qoute below with the available bonds was sent to me by my broker and I couldn't wrap my head around it.



***Please note that transaction is at clean price and settlement at dirty price (which is clean price plus accrued interest)****


Thanks.

emmanuelewumi:
We need money to fix electricity, security and infrastructure.


Chapel Hill Denham has a N50 billion Infrastructure bond Fund, United Capital is planning a N100 billion Infrastructure bond Fund for early 2020, Stanbic IBTC Asset Management has a N100 billion Infrastructure bond Fund, all these funds have a yield of about 14%.

SEC, PENCOM, CBN and the Investment community are looking at a multi billion dollar Infrastructure and real estate bond fund.


Waiting for government to fix our infrastructures won't deliver results

Those infrastructures I mentioned up there are totally government responsibilities.

We have a ton of tech startups, but it takes the government to fix electricity.

We have logistics companies everywhere, but the government has to fix the roads and the rails.

We have the population, but the government has to come up with policies that will favour them to run businesses.

So I don't get you.

jedisco:
I've taken so much hit over the last page simply cos I asked a question- why a government that spends majority of it's revenue servicing debts is taking on more local debt at such high rates when it could easily push rates lower and still get the funds it needs.

I have not been against anyone taking part in the sukkuk offering. I'd say it's one of the best investment opportunities in the country- to me much better than the NSE and perhaps even real estate.

The CBN gov the other day was talking about creating an investment vehicle to enable institutional cash which is sitting on bank balances to be invested in the real sector. I wonder how he aims to achieve that when bonds are at bonanza rates.

Someone said that in Nigeria, folks only complain of corruption when they don't benefit. To be clear, bonds are very much legal and this is one I could very much benefit from. But does it mean that no one is willing to ask questions about the attendant long-term effects of such high rates once they are beneficiaries?

Why are you seeing the 12.8 percent as wasteful from government.Many business men I know who do not know about this passive income and compounding thing will take you as a joker. When you tell them for every 1 million in a year you will give him #128,000 thousand..He will tell you he will likely make more money by selling recharge card with such amount.He will go ahead and tell you thousand of businesses he could do with such amount that will yield far better than that amount.Or you feel is only institutions that should participate in such things and money bags.

Biafran4life:
Why are you seeing the 12.8 percent as wasteful from government.Many business men I know who do not know about this passive income and compounding thing will take you as a joker. When you tell them for every 1 million in a year you will give him #128,000 thousand..He will tell you he will likely make more money by selling recharge card with such amount.He will go ahead and tell you thousand of businesses he could do with such amount that will yield far better than that amount.Or you feel is only institutions that should participate in such things and money bags.

This is totally off-point.

Read what he said again before commenting. He is not talking about the merits of these bonds and sukuk to investors but whether it is prudent for government to offer them at such rates when there are many investors who will still invest at much lower rates. For example, even at laughable rates, we still have people asking what the last tbills auction rate was

einsteine:
He is not talking about the merits of these bonds and sukuk to investors but whether it is prudent for government to offer them at such rates when there are many investors who will still invest at much lower rates.

Agreed. Society as a whole (not individual self-interested investors) benefits when Government borrows at the lowest possible price out there.

There is too much premium afforded between the market clearing priced (but nonetheless over-subscribed) TB rates and FGN bond rates. For the same underlying credit risk.

For instance, if the Sukuk were priced at 11.5%, it would still be oversubscribed. Some people here might choose not to invest, which is good as that money would go directly into the productive economy.

In my example above, there is absolutely no need for the Govt. to leave that 130bps on the table, rewarding rent-seekers*.


* Of which I am one, by the way.

jabolo:
Agreed. Society as a whole (not individual self-interested investors) benefits when Government borrows at the lowest possible price out there.

There is too much premium afforded between the market clearing priced (but nonetheless over-subscribed) TB rates and FGN bond rates. For the same underlying credit risk.

For instance, if the Sukuk were priced at 11.5%, it would still be oversubscribed. Some people here might choose not to invest, which is good as that money would go directly into the productive economy.

In my example above, there is absolutely no need for the Govt. to leave that 130bps on the table, rewarding rent-seekers*.


* Of which I am one, by the way.

How does the FG set Sukuk rates? Why not 10% or even lower? Do you think they set arbritary values? The so called "institutional investors", where they involved in the interest pricing?

More questions, the interest on loans from banks is about 11 to 10%, why not 15% or even 20%? After all needy borrowers will still collect those loans at 20%.

Tobex4realTobex234:
Those infrastructures I mentioned up there are totally government responsibilities.

We have a ton of tech startups, but it takes the government to fix electricity.

We have logistics companies everywhere, but the government has to fix the roads and the rails.

We have the population, but the government has to come up with policies that will favour them to run businesses.

So I don't get you.

For your information, most of the funding in the last 10 years are from the private sector. Pension Funds, Insurance companies, private equity Investors, High Networth Investors, private Businesess, retail investors are the major Investors in the bonds used in financing the infrastructure.

A N15 Trillion Infrastructure company was recently established by government with Chapel Hill Denham and Afrinvest as the asset managers of the company

sammily:
Please can you explain to me the meaning of dirty price and clean price and how it implies to FGN bond in the secondary market. The Qoute below with the available bonds was sent to me by my broker and I couldn't wrap my head around it.



***Please note that transaction is at clean price and settlement at dirty price (which is clean price plus accrued interest)****


Thanks.

The dirty price includes the accrued interest on the bond after the last coupon was paid.

Assuming a bond has a clean price of N100, coupon rate is 10%. Coupon payment dates are 30th June and 30th December.

If you bought the bond on 30th September 2021, the dirty price will be N102.5k. The additional N2.50k is the interest earned by the bond between 30th June the last date coupon was paid and the date you bought the investment ie 30th September

ositadima1:
How does the FG set Sukuk rates? Why not 10% or even lower? Do you think they set arbritary values? The so called "institutional investors", where they involved in the interest pricing?

More questions, the interest on loans from banks is about 11 to 10%, why not 15% or even 20%? After all needy borrowers will still collect those loans at 20%.

Loans from banks are between 16% to 30% per annum depending on the risk involved. I am currently doing 16% and 22% because the loans are secured with highly liquid collateral.

Fintech companies, finances houses and microfinance banks give out loans at 3% to 5% per month which is 36% to 60% per annum.

Even LAPO Microfinance bank that gives out loans at between 2.5% to 4% per month or 30% to 48% per annum raised over N6 billion from the bond market at a rate of 16%. The funds will then loaned out to small businesses at between 30% to 48% per annum

Even this 12.8% Sukuk, I used my fund and also got a loan at 22% to add to my fund and Invest in Sukuk 4

Some might think that was stupid. The loan is a 6 months loan, although I will be able to liquidate it by April 2022 because dividends and coupons are expected to be paid between February and March.

At 22% per annum, interest to be paid in 4 months is about 7.3% and I will earn 12.8% for the next 10 years

emmanuelewumi:
Even this 12.8% Sukuk, I used my fund and also got a loan at 22% to add to my fund and Invest in Sukuk 4

Some might think that was stupid. The loan is a 6 months loan, although I will be able to liquidate it by April 2022 because dividends and coupons are expected to be paid between February and March.

At 22% per annum, interest to be paid in 4 months is about 7.3% and I will earn 12.8% for the next 10 years

In this example a N1 million loan will pay a total interest of about N75,000 in 4 months.

Once your dividends and coupons are paid, you transfer the funds to a Money Market Fund account to earn about 9% and above per annum, when the sum in your Money Market Fund is equivalent to your loan and interest, you redeem your investment to make a bullet payment of both the lot principal and interest

It is not a stupid idea since expected coupons/dividends etc more than covers the short-term interest.

Personally, I am giving this Sukuk a miss at this time and will simply wait for Jan and March 2022 to do my compounding with purchases from the secondary market. Besides, I already have bonds maturing in c14 years (July 2034) that already yield 13+% per annum.

emmanuelewumi:
Even this 12.8% Sukuk, I used my fund and also got a loan at 22% to add to my fund and Invest in Sukuk 4

Some might think that was stupid. The loan is a 6 months loan, although I will be able to liquidate it by April 2022 because dividends and coupons are expected to be paid between February and March.

At 22% per annum, interest to be paid in 4 months is about 7.3% and I will earn 12.8% for the next 10 years

einsteine:
This is totally off-point.

Read what he said again before commenting. He is not talking about the merits of these bonds and sukuk to investors but whether it is prudent for government to offer them at such rates when there are many investors who will still invest at much lower rates. For example, even at laughable rates, we still have people asking what the last tbills auction rate was

And you are on point right .Is his logic not that the rate should go one digit.That at 2 digit the government is being wasteful as it will still get subscribe at a digit rate.I only explained it could discourage individual and small players

Do you agree with him?

Just got this from Stanbic IBTC Capital, Sukuk 4 coupon reviewed to 13%.

And also extended by 24 hours

emmanuelewumi,

This message is for you, if you don't publish a small book / pamphlet / journal on investment in 2022, I think I might be dragging you to the Supreme Court of Nigeria for not allowing Nigerians to benefit from your wealth of investment knowledge , because not everyone is on Nairaland.com, Nigerians both small, great, tomatoes and onion sellers, bread sellers, akara seller's, kunu and zobo seller's, okada riders fashion designer's, auto technicians are wasting their little income on Ponzi schemes and they need to be properly guided on the pro's and cons of financial literacy and investment ideas

emmanuelewumi:
Just got this from Stanbic IBTC Capital, Sukuk 4 coupon reviewed to 13%.

And also extended by 24 hours

It is likely that they may not have met their required target sum of 250 billion before it closed yesterday so they had to extend it. Also,

Though, there were lots of assumptions in the discussions here earlier. In all there was no consideration for the prevailing market price of 10 year bond issues in 2021 for both cooperate and government bond across board. MTN, Dangote Cement , Lagos State government etc all issued 10- year bonds this year. The benchmark/band of their rates were all from 12%. Will these corporate guys want to be imprudent as we perceive the FG Managers?

pls can i still send my mandate now and complete it tomorrow as i cant transfer more than 1m from my stanbic bank account and is it compulsory to fill a form as i av a cscs account

Very unfortunate that majority of Nigerians don't read, reading a good book on any subject is a burden to Nigerians. Most writers in Nigeria are hungry.

AngelicBeing:
emmanuelewumi,

This message is for you, if you don't publish a small book / pamphlet / journal on investment in 2022, I think I might be dragging you to the Supreme Court of Nigeria for not allowing Nigerians to benefit from your wealth of investment knowledge , because not everyone is on Nairaland.com, Nigerians both small, great, tomatoes and onion sellers, bread sellers, akara seller's, kunu and zobo seller's, okada riders fashion designer's, auto technicians are wasting their little income on Ponzi schemes and they need to be properly guided on the pro's and cons of financial literacy and investment ideas

freeman67:
It is likely that they may not have met their required target sum of 250 billion before it closed yesterday so they had to extend it. Also,

Though, there were lots of assumptions in the discussions here earlier. In all there was no consideration for the prevailing market price of 10 year bond issues in 2021 for both cooperate and government bond across board. MTN, Dangote Cement , Lagos State government etc all issued 10- year bonds this year. The benchmark/band of their rates were all from 12%. Will these corporate guys want to be imprudent as we perceive the FG Managers?

The big boys come at the last minute, imagine the interest to earned on N10 billion in a week.

Some stocks currently give a dividend yield of 11% which is better than a bond Investment of 12.8% on the long run ie 7 years to 10 years.

I see Fixed income Investments looking up in 2022.

Sukuk 4 will definitely be oversubscribed, even though the offer was opened during Christmas week and few days after MTN raised over N100 billion from the market

Akerewe:
pls can i still send my mandate now and complete it tomorrow as i cant transfer more than 1m from my stanbic bank account and is it compulsory to fill a form as i av a cscs account

Please do it before 12 noon, if possible call your account officer.

Next time you can walk into the bank to do the transfer if the cash if beyond your daily limit

Donbrig:
Very unfortunate that majority Nigerians don't read, reading a good book on any subject is a burden to Nigerians. Most writers in Nigeria are hungry.

Chai l will have to agree with you on this, someone said that if you want to keep a secret put it in a book because unfortunately many people will not read it

emmanuelewumi:
Please do it before 12 noon, if possible call your account officer.

Next time you can walk into the bank to do the transfer if the cash if beyond your daily limit

God bless you for ur swift responcse Oga emmanuelewumi you mean 12noon tomorrow? thats a done deal because i will go to the branch nd do the transfer but the notification said thursday 23rd. is it still valid till tommorow noon?

Akerewe:
God bless your for ur swift responcse Oga emmanuelewumi you mean 12noon tomorrow? thats a done deal because i will go to the branch nd do the transfer but the notification said thursday 23rd. is it still valid till tommorow noon?

Are you buying through Stanbic IBTC Stockbroker, if yes call your account officer.

emmanuelewumi:
Are you buying through Stanbic IBTC Stockbroker, if yes call your account officer.

yes i use stanbic bank always and am using them this time also, i dont av account officer currently as my former account officer left stanbic and i never inquire for the current one because i do most of my transaction with them online.

i bought the last sukuk and i did everythin online, is it compulsory i fill another form this time around. i will do it online too by filling it and scanning it to them. and i opend a cscs account last year too

Sure. But it also depends on what you want out of life. My debt taking days are over at 50+. Took lots of debt in the past (all paid back) to grow the size of ones investments just as profitable and well managed institutions have done since time immemorial.

emmanuelewumi:
Do you agree with him?

Akerewe:
yes i use stanbic bank always and am using them this time also, i dont av account officer currently as my former account officer left stanbic and i never inquire for the current one because i do most of my transaction with them online.

i bought the last sukuk and i did everythin online, is it compulsory i fill another form this time around. i will do it online too by filling it and scanning it to them. and i opend a cscs account last year too

Get enough confirmation before making payments, so that your money won't hang. The offer will close midnight today.

But if you are dealing directly with the main issuing house ie Stanbic IBTC Capital you should be able to be accommodated.

Other Stockbrokers are still expected to take the money they realized for the Sukuk to the issuing house. They are expected to do that tomorrow

emmanuelewumi:
Get enough confirmation before making payments, so that your money won't hang. The offer will close midnight today.

But if you are dealing directly with the main issuing house ie Stanbic IBTC Capital you should be able to be accommodated.

Other Stockbrokers are still expected to take the money they realized for the Sukuk to the issuing house. They are expected to do that tomorrow

thanks i will try as much as possible

skydiver01:
Sure. But it also depends on what you want out of life. My debt taking days are over at 50+. Took lots of debt in the past (all paid back) to grow the size of ones investments just as profitable and well managed institutions have done since time immemorial.

You take loans when you see opportunities, the debt should not be more than 50% of your Networth and you have enough passive income to liquidate the debts at the shortest possible time of about 2 years

Totally agree. I assume you meant 'should not be more than 50%' of your networth.

emmanuelewumi:
You take loans when you see opportunities, the debt should be more than 50% of your Networth and you have enough passive income to liquidate the debts at the shortest possible time of about 2 years

skydiver01:
Totally agree. I assume you meant 'should not be more than 50%' of your networth.

Typographical error

emmanuelewumi:
Please do it before 12 noon, if possible call your account officer.

Next time you can walk into the bank to do the transfer if the cash if beyond your daily limit

Or if you intend to be doing that volume of transactions from your comfort zone. You can increase your limit. The maximum you can increase to for the app and internet access is 5M.