₦airaland Forum

Because the coupon rates, which are set at the time of issue, are always used to pay bonds at their nominal values (twice a year) till maturity. The yield is cN15% on your FGN bond 2027 purchase because the clean price is above the nominal price @ N103.07. You did not pay N12m at time off issue, you paid N12.4m (excluding accrued interest because you get this back) so your yield is c15% till maturity. Anyway, March 17 which is a Sunday is not far, so you will find out what your six monthly payments will be when your account is credited on 18 or 19 March, 2024

manwomanok:
it appears you use coupon rate of 16.29% on your calculation. why sir

thought what i will be getting is yield of 15.0% as sated

Precisely cN977,400 on c17th March & cN977,400 on c17 Sept of each year (inclusive of 2024) till the bond matures on 17 March 2027

manwomanok:
what is that FREQUENCY (2) and BASIC (1) mean

Yes it is normal. Both the clean and dirty prices are below N100

Akerewe:
Is the attached bond advice normal?

I discovered it's the opposite of the subject matter. Pls advice accordingly

The value of the NOMINAL VALUE will exceed (be more than) the CASH AMOUNT when the bid price of the bond rises and exceeds N109.15 on the secondary market

Akerewe:
Pls what happened when NOMINAL VALUE IS MORE THAN THE CASH AMOUNT?

The units of bonds purchased is the nominal value divided by N100 (N12,000,000/100 = 120,000 units)

manwomanok:
very clear explanation. only that i cant understand where you get the unit from. the 120,000 unit

Yes it will be recovered

NL1960:
Great explanation.

Some questions.

If the buyer will be paid N12m at the maturity date of the bond and the buyer's account is now being debited for N13m, that is already a difference or suppose loss of N1m.

Will that amount be recovered by the buyer through the periodic coupon payments?.

I cannot explain it more than I have shown in the table below.

manwomanok:
Thank you sir

i noticed an amount of 12m nominal value and amount of 13.09m which is cash amount. what is the cash amount mean? is the different bank commission/charges

I want to learn

The nominal amount is the value of the bonds you were sold which will be paid at Maturity. The cash amount is the price you paid for each unit of the bond i.e., cN103.07 plus the accrued interest since the last coupon date - in this case the last coupon payment was made on c17 Sept 2023. The accrued interest from 17 Sept 2023 to 31 Jan, 2024 has to be paid by the buyer of the bond. That's what is called the dirty price - in this case being cN109.15. But don't worry about that because you get it all back (the accrued interest) at the next coupon date (in this case March 17, 2024). The dirty price simply includes the accrued to the settlement date of when a bond is bought/purchased. So the cash amount of cN13.1m is what will be debited from your account sometime today. Hope the above explanation helps.

manwomanok:
and...

What is the NOMINAL AMOUNT and CASH AMOUNT
what is the accrued interest

It simply means the price of the FGN bond maturing March 2027 was sold to you at cN103.07 (clean price). Because it is above the nominal price at the time of issue (N100) it makes your yield ~15% per annum till it matures (Maturity Date).

manwomanok:
can someone explain this to me pls

For example, you can enquire from your bank, to start with, that you would like to buy monthly United States treasury bills (e.g. the 10, 20 or 30 years) and take it from there. Over time you will be in a position (unless you are already in a position) to open an account with an international Investment and Asset Management institution like Shroders who have been around for over 200 years. Shroders was founded in 1800.

tundebasic:
So, sir, if I may ask, which channel, app, or investment companies do you use to access foreign currency denominated investments from Nigeria?

Correct 100%. I have been saying for quite some years now that, I think its best for us to have a diversified portfolio of investments that include various asset classes including FX denominated investments that pay returns in FX (coupons and dividends). Because, the devaluation of the Naira's trend has been with us for many years now. Such a portfolio can built bit by bit over time. For example, I think my first Naira investment many years ago was a one year N50,000 TBill purchase. The main point is to start as early as one can and invest with whatever one can and increase it over time but diversify. There are many FX denominated funds one can buy even from/via Nigerian banks. All you need is a domiciliary account and you are good to go. Another example, is there was time I was purchasing $50 of the funds every single month (not Naira $ Eurobonds). Over time it can become quite sizeable whatever the Naira does

Tranquility2345:
I think Skydiver made solid points from his own point of view about the situation. The key lesson he was passing across is the power of diversification when it comes to the currency of savings and investments…

Thank you and very precise 👍 I have never bought Nigerian Eurobonds in my life.

Tranquility2345:
What makes you think his fx investments are Nigerian bonds denominated in dollars (these are called Eurobonds by the way)? And who told you that you have to go physically to the USA to invest in their bonds? I swear I feel like giving you a very hot konk on that your yellow bald head

Yes, I am. No I am not bald but have some grey hairs on my head.

Tranquility2345:
Your kids are out of school and employed? 😳
Never knew you were that old o. Abeg if you don’t mind me asking? Please are you bald? 😁

I am unperturbed. I made the FGN Naira bond investments with the sole objective of the coupons meeting my expenses in Nigeria which continues to hold true today even while the Naira has continued to fall. This is the reason I also made majority of my portfolio in FX investments. My two kids are out of university and in gainful employment. I have no rent to pay in Nigeria because my properties are fully paid for and I am paid rent on one of them. I will give you a simple example (though I have many) of why I am unperturbed. I live a simple life though I do enjoy myself with friends. However, in the last 10 years I have been unable to spend more than N6m a year on expenses. So, even if the Naira falls to N5,000 to the US Dollar, it simply cannot bother me in the least. This is why it is important to have a diversified portfolio. It is meant to balance out risks and continue to grow. I assure you I made a good investment in the FGN Naira bonds because it met and continues to meet my needs and objectives. My Naira investments were never based on an expectation of the Naira appreciating and I am not also interested in converting any of my FX investment's coupons and dividends into Naira - those are for my expenses when I am not in the country holidaying. I hope the above helps put into perspective your assumption of how I feel

Tranquility2345:
I understand how you feel. It happens to all of us (including me). Nobody ever wants to admit he or she made a stupid investment decision, especially relating to Naira. There is no way one is better off holding naira long term. No way at all.

The key problem is that it’s never easy to bite the bullet because we always think it’s not a good time to change. Optimists say Naira can rise anytime, can’t you see Dangote refinery is finished?. Then we keep waiting and waiting and waiting while the naira keeps falling and falling and falling until it got to 1400 😔😢

I am quite aware of the Naira's devaluation over 4 years. I am unaffected by it because of my dollar investments as far back as 15 years ago. The FGN bond coupons more than meets my annual expenses in Nigeria and that is super fine with me. Its called diversification. I have a well balanced diversified portfolio that includes FX investments that also pays both coupons and dividends in FX. Don't bother yourself about my FGN bond holdings. My FX investments has covered many times over the devaluation of my FGN Naira bonds you refer to. I am fine because of the benefits of having a diversified portfolio

TotoNaRubber:
Nice coupon but do you know that the capital of this investment has been devalued by over 383% from 2020 when dollar was at N365.

If you had bought dollar with the capital and held till now, you would have been a lot better.

Your N50m @ N365/$ in 2020 = $136,900, It is now worth N50m /N1400 in 2024 = $35,714.

You lost over $100,000 in 4 years and counting

My account was funded on 22 Jan, 2024 by the coupon payments of my FGN 2026 & 2034 bonds (compounding)

RayRay06677:
FG bond bidding is 29th, fund your account today

Be gentle but quite funny Happy New Year in advance to us all.

Tranquility2345:
Did you pass maths when you did WAEC

It means you will pay the offer price (N97.03) per unit purchased plus about 6 weeks coupon interest from 26 Oct 2023. Simplz

Akerewe:
STANBIC BANK

Pls if the yield of this 2049 is 15.26% what is the effect of settlement at dirty price on the face value invested

👍💯 Life can be as simple or complicated as one chooses to make it. Even today, with all the devaluation and inflation that has occurred in Nigeria over the years, I still struggle to finish spending my annual coupons & dividends. Nevertheless, it is sensible to have some diversification in FX.

RayRay06677:
I am "stupid", no change in plan after reading this, it's unwise to criticise a "stupid" person without providing a sensible alternative making you look stupid.

If I get 500m at 60years, I have about 30 or 40 years to live, kids are done, house in my village is certain, all I am after is my satisfactory retirement life with my fellow villagers.

I need to be changing cars at least every 5yrs, my only worry is feeding and charity which is a function of what remains after taking care of my needs.

Look at me and say that 5m a month wouldn't feed me in next 30years.

Remember, the older you get, the less you eat.

Now to the unwise one, what else can be that stable in this your Nigerian economy of trials every 4 years?

Aside crime, nothing thrives, ask dangote why he is so fraudulent(unfair pricing at monopoly) despite govt patronage.

I need peace of mind at all times and it's personal meaning only my ways can achieve my peace of mind, outcome inconsequential as long as I can eat twice a day, roof over my bald head and any means of transport to move around my village in search of fresh paint.

😂😂😂

oluayebenz:
Please don't start....

I'm not feeling fine 🚶🚶🚶

Correct. Just like the below (FGN Bond 2036)

emmanuelewumi:
An investor who invested N20 million to buy 1 million units of Dangote Sugar shares in January 2023 would have earned a dividend of N1.5 million in May 2023.


After the announcement of the merger of Dangote Sugar, NASCON and Dangote Rice to form Dangote Foods, the share price of Dangote Sugar rose to N55.


If he sold all his shares in August and bought 9100 units of FGN 2050 bond, he would be earning about N8 million from the Investment in 2024 till 2050.

That is how income investors move their Investments from one asset class to another.


I am very sure that Dangote Foods will get to over N160 per share before the end of 2024. BUA foods is already over N200 per share

What is wrong with Seplat and Access Bank Eurobonds? Even if you have reservations over FGN Eurobonds.

Wotowotoman:
Eurobonds?

Below is one example.

Wotowotoman:
What fx denominated securities can the average Nigerian living in Nigeria invest in? Very few options available….

One way is to collect you Naira dividends or bond coupons and buy fx ($, £, €, etc). Which can be invested in fx denominated securities or just save it after conversion in your domiciliary account.

milliondollarma:
How do one save or invest in dollars?.

The last TBill auction was two days ago (13 Sept 2023). The next one is expected in two weeks (27 Sept 2023) as shown in the 4th quarter schedule below.

cutedharmee:
Good day everyone. Pls when is the next treasury bill Investment Sir's/Ma's

I did not bid.

teejay5:
Pls av u been debited?

You will be debited tomorrow or Friday

teejay5:
Pls av u been debited?

NTB auction results today. 364 days rate went up.

I imagine tomorrow 23 August 2023

teejay5:
Good morning house,pls wen is d next treasury bill investment.

Kindly find below the NTB auction results for 8 August 2023. Rates going down again wow, look at the 364 days... 8 to 1 demand ratio.

Kindly find below todays NTB auction results. Rates going up again

Received. Happy Days

skydiver01:
The 2026 FGN bond is due today. So I expect it to drop on Tuesday