₦airaland Forum

Hedgefunds:
Is this sector still worth it since annual return is below 10%?

Most are over priced.

If you have appropriately priced ones to buy. Or you buy land and build, with rental yield of 10% and above . Or buy land to hold for about 10 years

UPDC REIT is getting a rental yield of about 12% from the hostel built at Lagos Business school

SeaTrade:
I was the one you told this.
You can bring down cost of producing your catfish by having more capacity ,this is very valid.I don't know why nezzjnr was arguing this.
It is easy to produce 80,000 fish but selling it is the hard part.
You can't possibly sell 80k fish at once during maturity,so other factors will now come into play that will affect your profits.
How do you store 80k mature fish to begin with?Won't they start cannibalising each other?
Let's say you want to dry them,drying 80k fish is another logistic nightmare on its own that will wipe a great deal of your profits.
If you want to sell fresh too,you can't because they can't buy all at once, so if you do this there'll be a lot of spoilage and rot.
Best thing is to grow the fish batch by batch and sell according to demand.
Don't just press calculator and begin to jump,na where many people dey fail for business be this.

You have just repeated all that Nezzjnr said and now trying to sound like you are a smart ass. What is wrong with you??

SeaTrade:
I was the one you told this.
You can bring down cost of producing your catfish by having more capacity ,this is very valid.I don't know why nezzjnr was arguing this.
It is easy to produce 80,000 fish but selling it is the hard part.
You can't possibly sell 80k fish at once during maturity,so other factors will now come into play that will affect your profits.
How do you store 80k mature fish to begin with?Won't they start cannibalising each other?
Let's say you want to dry them,drying 80k fish is another logistic nightmare on its own that will wipe a great deal of your profits.
If you want to sell fresh too,you can't because they can't buy all at once, so if you do this there'll be a lot of spoilage and rot.
Best thing is to grow the fish batch by batch and sell according to demand.
Don't just press calculator and begin to jump,na where many people dey fail for business be this.

You guys are just giving free consultancy services

Tranquility2345:
You have just repeated all that Nezzjnr said and now trying to sound like you are a smart ass. What is wrong with you??

Bia nwokem,go find your likes to play with,
I am not ya mate.

SeaTrade:
Bia nwokem,go find your likes to play with,
I am not ya mate.

Of course you are not my mate. Are you not that lonely 40 year old man that goes to cold stone to eat ice cream like a child and look for teenage secondary school girls when your mates are busy paying school fees?

jedisco:
Government borrowing rates are very different from individual rates.

More than 10% for government bonds is extremely high. Very few countries offer that- and such countries all have one thing in common. They have about the worst performing currencies.

Business folks may get higher rates of returns but it comes with added risks. You don't expect PFAs to put folks pensions in recharge card business. The reason I didn't partake in the last bond was cos I had used free funds I had to buy grains backs weeks. A bag of maize I bought for 17.5k then now sells for 25k. That's over 40% in about 2 months and prices may still rise before the rains. But then, it doesn't come with the safety a government backed bond gives

You are not considering the prevailing Bond Market rates... MTN Nigeria issued a 10 year corporate not quite long, same with Dangote Cement and Lagos State Government. Their rates were all in the neighborhood of 12%. All these are to be considered in determining rates. Like I ask before and will still ask again does it mean that the experts of these companies and state government are not being prudent too..? These companies and sub-national Bonds are well rated and have not defaulted too. So the risks with them are relatively minimal.

You should be looking at the inflation rate and devaluation and currency devaluation in the USA and China when using their bond rates as reference.

Tranquility2345:
Of course you are not my mate. Are you not that lonely 40 year old man that goes to cold stone to eat ice cream like a child and look for teenage secondary school girls when your mates are busy paying school fees?

Whatever, just know say I no be ya mate ,go find people weh una go fit play rubbish together.
Make I finish my aphrodisiac first see whether I go fit gather strength to climb your mama

SeaTrade:
Whatever, just know say I no be ya mate ,go find people weh una go fit play rubbish together.
Make I finish my aphrodisiac first see whether I go fit gather strength to climb your mama

At your old age of over 40, you are so lonely that you siddon for house drinking solo and smoking away your dying lungs. Please don’t commit suicide o. I can imagine how rough it must be for you at this time of the year as your mates are spending time with their families and kids and you have no one in this world.

You hustle so hard through out the year but have nobody to spend the coins you make with. Depressed, you take pictures and then post on Nairaland to oppress small children wey you fit born. But deep down you know it still doesn’t make you happy. I hope 2022 will be better for you sha.

emmanuelewumi:
Most are over priced.

If you have appropriately priced ones to buy. Or you buy land and build, with rental yield of 10% and above . Or buy land to hold for about 10 years

UPDC REIT is getting a rental yield of about 12% from the hostel built at Lagos Business school

Now that you said buy a land and hold for 10 yrs I went to refresh my mind in 2005 .I remember buying land at government layout in kaduna for 200k and 300 k.Then sold it in 2011 and 2013 for 2 m and 3 m.I never saw it as something big but with my calculations now that was a good percentage over the years

People dey show their table, lol. Chai, nawao for this Nija, poverty has dealt with us o.

freeman67:
You are not considering the prevailing Bond Market rates... MTN Nigeria issued a 10 year corporate not quite long, same with Dangote Cement and Lagos State Government. Their rates were all in the neighborhood of 12%. All these are to be considered in determining rates. Like I ask before and will still ask again does it mean that the experts of these companies and state government are not being prudent too..? These companies and sub-national Bonds are well rated and have not defaulted too. So the risks with them are relatively minimal.

You should be looking at the inflation rate and devaluation and currency devaluation in the USA and China when using their bond rates as reference.

If I may. You're actually reinforcing our view. How can an FGN bond be priced at 13% with a corporate bond at 12%? This is only possible if the said corporate has significant foreign revenues that can be said to 'pierce the national veil'

The country can always print money to service its bonds, or tax the corporates more.

And, if the nation defaults, the corporates are marked down because political risk has increased in their operating environments.

I think the advisors on the Sukuk screwed up and overlooked their mandate. I deal with these guys all the time. It's year end - they get lost and giddy about their individual bonuses.

Here, I'd say it's not the volume of oversubscriptions that is the success benchmark, but the lowest cost (to the country) to achieve the required bond amount.

Peace.

Biafran4life:
Now that you said buy a land and hold for 10 yrs I went to refresh my mind in 2005 .I remember buying land at government layout in kaduna for 200k and 300 k.Then sold it in 2011 and 2013 for 2 m and 3 m.I never saw it as something big but with my calculations now that was a good percentage over the years

This is a good one.
Real Estate is key but it may not be really huge before one would invest in it. I remembered buying a land around April this year at FO1 in Abuja at 4.8 and i gave the agent only 200k amounting to about 5million. After about 3days ,I got a call with an offer of 6million naira from one medical doctor through my agent. I refused to sell because the area is in high demand.

I remembered I also advised someone here to buy a building material shop around that area close to daughters of charity,the two shops I bought for one million naira each is going for 2million now while the warehouses are going for 7million against the old price of 1.8 million all in one year.

Real Estate can't be underestimated.

jabolo:
If I may. You're actually reinforcing our view. How can an FGN bond be priced at 13% with a corporate bond at 12%? This is only possible if the said corporate has significant foreign revenues that can be said to 'pierce the national veil'

The country can always print money to service its bonds, or tax the corporates more.

And, if the nation defaults, the corporates are marked down because political risk has increased in their operating environments.

I think the advisors on the Sukuk screwed up and overlooked their mandate. I deal with these guys all the time. It's year end - they get lost and giddy about their individual bonuses.

Here, I'd say it's not the volume of oversubscriptions that is the success benchmark, but the lowest cost (to the country) to achieve the required bond amount.

Peace.

Did you consider the tenors and timing of the bonds.

4 years ago 16% was okay, in 2022 ten year bond will be 13% and above, based on what some commercial papers are offering

SeaTrade:
I was the one you told this.
You can bring down cost of producing your catfish by having more capacity ,this is very valid.I don't know why nezzjnr was arguing this.
It is easy to produce 80,000 fish but selling it is the hard part.
You can't possibly sell 80k fish at once during maturity,so other factors will now come into play that will affect your profits.
How do you store 80k mature fish to begin with?Won't they start cannibalising each other?
Let's say you want to dry them,drying 80k fish is another logistic nightmare on its own that will wipe a great deal of your profits.
If you want to sell fresh too,you can't because they can't buy all at once, so if you do this there'll be a lot of spoilage and rot.
Best thing is to grow the fish batch by batch and sell according to demand.
Don't just press calculator and begin to jump,na where many people dey fail for business be this.

Thank you Very much SeaTrade.

Very possible to produce... Selling is the issue... You'll be at the mercy of sellers... Middlemen.

You might get frustrated and sell at giveaway price.

Nezzjnr:
Thank you Very much SeaTrade.

Very possible to produce... Selling is the issue... You'll be at the mercy of sellers... Middlemen.

You might get frustrated and sell at giveaway price.

Fish mongers are another Mafia group entirely

emmanuelewumi:
Fish mongers are another Mafia group entirely

You can't sell if you don't go through them.

Same with those Mile12 agents... Though those ones are the lesser devils.

Nezzjnr:
Thank you Very much SeaTrade.

Very possible to produce... Selling is the issue... You'll be at the mercy of sellers... Middlemen.

You might get frustrated and sell at giveaway price.

After your free lessons, the audio billionaire will sit in his Uber car and start boasting to you about all his tashere billions and how he is the richest guy in Nigeria.

.

Tranquility2345:
After your free lessons, the audio billionaire will sit in his Uber car and start boasting to you about all his tashere billions and how he is the richest guy in Nigeria.

Someone that's rolling with people that are in charge of business in Nigeria.... I have to be Humble oo

emmanuelewumi:
Did you consider the tenors and timing of the bonds.

The guy specifically referenced MTN 10 year bonds.

It's weird economics not to have at least 100bps delta between similar tenored national and corporate bonds.

emmanuelewumi:
I never asked you for all these unnecessary details, did I?


Anyway it shows we don't have audios here Sha.

Emma you are the supposed chief contributor and a leader here, when elders dey market,small pikin head no suppose to dey drag for ground. I know you want peace here as you are a lover of pure Investments discussion but then I warned you about that your Smalley lazyyouth uncouth conduct towards people , the results is what you are seeing now, you blamed every one except him for the chaos and digression going on here. And that your subtle or sarcastic ways of shading people only show that you are learning some negative vibes from him

Being rich is relative, your entire worth might be someone else wristwatch, but I do understand why some people here can't let it slide when being referred to as a small fry because we take insults differently hence we tend to protect our reputation in a best way deemed fit. The problems of this thread is lazy youth and his many monikers constituting nuisance here. I've gained so much from here but since that low life came on board it's been chaos, almost all the sensible contributors have left or change monikers, what a toxic and negative personality.

jabolo:
The guy specifically referenced MTN 10 year bonds.

It's weird economics not to have at least 100bps delta between similar tenored national and corporate bonds.

What was obtainable in June 2021, might not be obtainable in January 2022.


The benchmark for a 10 year FGN bond in the secondary market is 12.6%. It will be more than that in the primary market

Brainbox0806:
Emma you are the supposed chief contributor and a leader here, when elders dey market,small pikin head no suppose to dey drag for ground. I know you want peace here as you are a lover of pure Investments discussion but then I warned you about that your Smalley lazyyouth uncouth conduct towards people , the results is what you are seeing now, you blamed every one except him for the chaos and digression going on here. And that your subtle or sarcastic ways of shading people only show that you are learning some negative vibes from him

Being rich is relative, your entire worth might be someone else wristwatch, but I do understand why some people here can't let it slide when being referred to as a small fry because we take insults differently hence we tend to protect our reputation in a best way deemed fit. The problems of this thread is lazy youth and his many monikers constituting nuisance here. I've gained so much from here but since that low life came on board it's been chaos, almost all the sensible contributors have left or change monikers, what a toxic and negative personality.

When you ignore a troll, the troll will withdraw back to his shell.


But when people respond to a troll or spam a Treasury Bill Investment thread with what a troll wrote two years ago on a thread that is not related to Investment don't you think that the people doing that are not different from the troll?

emmanuelewumi:
When you ignore a troll, the troll will withdraw back to his shell.


But when people respond to a troll or spam a Treasury Bill Investment thread with what a troll wrong two years ago on a thread that is not related to Investment don't you think that the people doing that are not different from the troll?

Why are those grown men so afraid of the so called troll? Is it because he exposed their audio ways? Why are grown men coming on an anonymous forum to boast about wealth they will never see in their lifetimes to total strangers? The thing tire person jor.

emmanuelewumi:
What was obtainable in June 2021, might not be obtainable in January 2022.


The benchmark for a 10 year FGN bond in the secondary market is 12.6%. It will be more than that in the primary market

Understandable.

As at the time of the data you show, the Sukuk was already announced at 12.8% coupon so it's only correct that comparables (or near comparables) on the secondary market are immediately priced to offer matching yields.

Una dey make me shame for this thread. Grown up men bickering. Tueh.

Sukuk bind was 234% oversubscribed.

emmanuelewumi:
In this case it is experts at DMO that determine the coupon rates after taking into consideration inflation and future currency devaluation.

Ask yourself why the coupon was even increased from a so called high rate of 12.8% to 13%.

Investors will always move money to where they can get better returns, I hope PENCOM will soon remove the restrictions that prevent pension fund managers from Investing outside Nigeria.

Currently Investors are getting dividend yields of 11% in the stock market, dividend payout ratio of 60%, this is far better than a 13% coupon from a bond on the long run

The 0.2% increase was another thing that didn't add up. When the increase was announced, I was expecting a much lower subscription. Except they were yet to fill their bids at 12.8% (which was highly unlikely), then further increasing the rates doesn't add up. But then, this is Nigeria....such increase could easily be due to personal gain

I support the restrictions on mandatory pension funds. Nigeria is a developing country that needs investments and hence should lock in as much liquidity as possible. Similar restrictions should sensibly be extended to banks too (if not already in place)- that would limit majority of profit investments locally except in certain circumstances e.g expansion

emmanuelewumi:
.

1) Pension Fund Managers, Insurance companies and other institutional Investors are more interested in dividend yield and the long term earning growth of the business

2) You can't get Bank loans of 12%, except you use your fixed deposit Investment as a collateral.
Any business in Nigeria that can't give one a minimum profit margin of 16% and above is not worth.

Just learnt that some commercial papers offer as high as 15%

3) US is also printing money.

4) Inflation is a major problem all over the world. Investors should be concerned about how to get returns that can stay ahead of inflation.
Devaluation is the aftermath of inflation compared to inflation in other countries

Every country prints money (over 20% of circulating USD was printed within the last 4 years). But very few countries use new money to facilitate huge payouts to bond buyers. Every country needs widely available single digit commercial loans to drive investment. A sustained double digit bond rates zeros that chance.

I think we differ on certain fundamentals on this subject matter. You're looking at it from the point of an investor which understandably should go for the best returns. I'm looking at it from the long-term effects of such such rates on the economy if sustained.
My view is in keeping the CBN has followed a more tapered approach of getting the best rates of whatever amount they want to borrow thru TBs. Your approach is in keeping with the DMO who are going with prevailing market rates irrespective of the long-term effects.

We've had a prolonged discussion on this matter and I think I've done enough to point attention to the fact that bond rates have wider long-term implications. No need going back and forth, but the coming years should decide

jedisco:
The 0.2% increase was another thing that didn't add up. When the increase was announced, I was expecting a much lower subscription. Except they were yet to fill their bids at 12.8% (which was highly unlikely), then further increasing the rates doesn't add up. But then, this is Nigeria....such increase could easily be due to personal gain

I support the restrictions on mandatory pension funds. Nigeria is a developing country that needs investments and hence should lock in as much liquidity as possible. Similar restrictions should sensibly be extended to banks too (if not already in place)- that would limit majority of profit investments locally except in certain circumstances e.g expansion

A 10 year bond in the secondary market is cutrently 12.6%, primary market bonds gives a better yield. So the 13% on the last Sukuk is appropriate

ojesymsym:
How do you do this? Do you have to handle the logistics and storage. I am assuming you are not located in the region where those commodities are being sold.

As a first timer, being in the northern states gives a better overview. The recent ones I did were done without being local as I have a good network on ground.

Except you're buying trailer loads, storing grains is relatively straightforward. A well aerated room, free from rodents/rain and one that'd permit regular checks. It's also sensible to put wooden pellets on the floor before laying bags. Also, I prefer to keep some space between stacked bags and the wall.

Buying is also straightforward. Village markets used to be the cheaper go-to option. But the current security situation makes sticking to markets within the city safer. You go early and lucky enough, you could get your bids filled. Or liaise with some market heads to arrange a direct supply for you (if buying in bulk). Also, in the market, you could easily find boys who'd help put in the chemicals they use to store grains into the bags and handle loading and offloading for a token. Stuff is transported to an already prepared storage room. The other thing is worth making sure the grains are dried.

Selling has some tricks but largely hassle free as grains are staple. All one needs to do is first confirm the prevailing market rate. For small amounts, you might need to take them to the market. For larger amounts, once one or two market folks know, they'd organise transport and pick-up from your storage location. I prefer the second though sometimes I sell at slightly lower than market rates. Timing of sale is also tricky. Sometimes prices rise into Dec/Jan and plateau. Other times, they rally into the start of the rains

The risks are mainly those of rodents, rain, pests and knowing your way around the market. The first two are easy to control if properly stored. Worse still, u get a cat. Knowing ones way around comes with experience but buying grains are relatively easy.
The last is price- for obvious reasons, the price of staples would usually increase into the dry season. Some years, appreciation could get to over 100%. On others, there may not be much increase. But if bought at the right time, one would almost never sell at a loss.
The recent devaluation in the naira has also meant grains are relatively cheaper in Nigeria hence surrounding countries also buy further pushing up price.
The price variations on a particular grain are difficult to predict so mostly, I split across a number but still have most of maize.

freeman67:
You are not considering the prevailing Bond Market rates... MTN Nigeria issued a 10 year corporate not quite long, same with Dangote Cement and Lagos State Government. Their rates were all in the neighborhood of 12%. All these are to be considered in determining rates. Like I ask before and will still ask again does it mean that the experts of these companies and state government are not being prudent too..? These companies and sub-national Bonds are well rated and have not defaulted too. So the risks with them are relatively minimal.

You should be looking at the inflation rate and devaluation and currency devaluation in the USA and China when using their bond rates as reference.

Commercial bonds should reference off government bonds not the other way round. Also Nigeria is hardly the country to believe that 'professionals' in government offices always have the interest of the nation at heart. This is a country where recovered funds are easily relooted. 100 million if given to the right people can easily do wonders. After all, CBN continued to issue new BDC licenses and sell dollars to them even when it was obvious for years they were round-tripping.

Government bonds serve as a benchmark for commercial loans, interest rates, new money being printed e.t.c which all have a direct effect on inflation and devaluation. Hence why many nations tinker with government borrowing rates as a means of controlling inflation.

Over N800 billion was raised within 5 days for Sukuk 4.

I can tell you that the total money realized from retail investors and those who invested N100 million and below is about N80 billion.

And the additional N750 billion was raised by the big boys ie Banks, Pension Fund Managers, Insurance companies, Mutual fund managers and other institutional Investors about 9 hours before the deadline which was midnight of 23rd December 2021.

There is a reason why DMO sent messages about 12 hours before the deadline that coupon had increased from 12.8% to 13%.