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Gambling - Portland follows in KQ footsteps...
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Hi-Lo
#1 Posted : Wednesday, July 29, 2009 3:18:00 PM
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Joined: 10/5/2007
Posts: 91
...KQ has found a new disciple in hedging strategy...this time not crude...but FOREX by EA Portland. It wants hedge Ksh 3bn outstanding yen loan...ostensibly to stablise profits ravaged by KES/JPY fluctuations. Granted nobody knows in which direction this KES/JPY exchange will take in the next 10-20 years...why bother making a guess [yes,a guess - even the 2 physicists that derived the hedge equations on Wall St were wiped off 12 years ago in huge embarassment,and their followers were done in last year...] and committing such money? Ati 3bn loan will be removed from BS? What about the hedge gains/losses - and the way they magnified? Anyways it's their biz...but I suspect the cunning Bamburi is tricking them into it...

Playing the stock market without insider info...is like buying a cow in the moonlight.
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Hi-Lo
#2 Posted : Thursday, July 30, 2009 4:40:00 AM
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VVS...Bamburi has a bigger stake in Portland than gava or nssf...check it out. Some things we suspect,others we guess,others we know...so I only suspected internal sabotage in the fight for market share...nothing more...

Playing the stock market without insider info...is like buying a cow in the moonlight.
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VituVingiSana
#3 Posted : Thursday, July 30, 2009 5:27:00 AM
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Joined: 1/3/2007
Posts: 18,098
Location: Nairobi
Bw. Hi-Lo... Even though Bamburi has more shares... coz GoK controls NSSF... the overall voting is in favor of govt. Bamburi has only ONE board seat... and they clashed at last AGM. I was there. AGM started late sana... you could see the Bamburi Nominee arguing with the EAPCC guys behind the scenes... Technically,Bamburi has little say in EAPCC.
*** U do know that EAPCC cars/vehicles have BLUE plates? What does that tell you?

Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Hi-Lo
#4 Posted : Thursday, July 30, 2009 6:00:00 AM
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Posts: 91
@VVS..exactly...then my suspicions is correct...that Bamburi is actively undermining Portland...see what EABL is doing in Tz?

Playing the stock market without insider info...is like buying a cow in the moonlight.
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kizee
#5 Posted : Thursday, July 30, 2009 6:11:00 AM
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Posts: 537
@ hi-lo

comparin the eapcc and kq hedge is like comparin apples n oranges...eapcc will probaby do a currency swap exchanging kes cashflows with jpy cashflows thus eliminating FX exposure on the loan...eapcc wud be silly to forestall this hedge any further...to date i think they hav burnt close to kes 5 bn on this jpy exposure....
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Hi-Lo
#6 Posted : Thursday, July 30, 2009 6:21:00 AM
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@Kizee...you could be right coz they said they'll get Ksh 3bn in Yen upfront and bank it...and pay off loan in the half yearly installments as they fall due. Qn is..will they use today's exchange rate of 80 with maybe some small premium...or they'll use complex estimations of the future volatility?

Playing the stock market without insider info...is like buying a cow in the moonlight.
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mtaalam
#7 Posted : Thursday, July 30, 2009 6:27:00 AM
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What is eabl doing in Tz?

ili iwe funzo...
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kizee
#8 Posted : Thursday, July 30, 2009 6:48:00 AM
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a currrency swap is merely an exchange of cashflows,they will convert kes to jpy at todays rate and receive fixed jpy cashflows to match the principle and interest repayment of the jpy loan for the period of the loan wherein they shall again exchange principles...at the same time they shall pay a fixed amount of kes to the financial institution that sold them the hedge....for all intents and purposes eapcc borrow jpy and lend kes...the jpy loan is somewhat hived off their balanc sheet and thus they no longer are exposed to it....the issue of revaluation of a currency swap thus does not arise and expected future value calculations would not arise
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VituVingiSana
#9 Posted : Thursday, July 30, 2009 6:59:00 AM
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Mon ami... Even if Bamburi wanted to 'undermine' EAPCC they cannot thru their position on the board. EAPCC has only ONE (moja) director... while NSSF & GoK call the shots. As for the marketplace... that is a different story...

Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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VituVingiSana
#10 Posted : Thursday, July 30, 2009 7:17:00 AM
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The problem is... that if the JPY weakens (which I think it will) vs KShs... then EAPCC will leave money on the table. That said... with out shoddy politics... who knows where the KShs is headed?

Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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mtaalam
#11 Posted : Thursday, July 30, 2009 7:17:00 AM
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What is eabl doing in Tz?

ili iwe funzo...
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Hi-Lo
#12 Posted : Thursday, July 30, 2009 7:28:00 AM
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Joined: 10/5/2007
Posts: 91
@Kizee...good...but let me put it the way I undertand you...say Sumitomo.jp lends Portland Yen in exchange for USD (forget untradable Ksh). For their magnanimity,Sumitomo (earning in Yen at home so currency swings irrelevant) appears to lend Portland not at the current 2.5%pa but with some mark up say loan is now at 3.5% - they pocket the difference? If this is the case,I vouch for it...damn,why has it taken them 9 years to act on an obvious concept...

Playing the stock market without insider info...is like buying a cow in the moonlight.
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VituVingiSana
#13 Posted : Thursday, July 30, 2009 7:38:00 AM
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No-one was daft enuff to bet against the Yen (vs the KShs). EAPCC could have entered into a vanilla swap but the price would have been hefty... but we wish they had tried...

Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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VituVingiSana
#14 Posted : Thursday, July 30, 2009 7:42:00 AM
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EAPCC tried to pay the Yen loan off lakini the Japanese said no... they were happy with the income! Perhaps buying JPY & leaving it in a bank wud have been better lakini 20/20... ____ if u knew... u wud b a trader earning millions!

Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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kizee
#15 Posted : Thursday, July 30, 2009 7:48:00 AM
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@ hi-lo

yes...bank x lends eapcc jpy at jpy libor + a spread and takes kes from eapcc at the equivalent 11 year kes rate(perhaps the yield on an 11 year kes paper- a spread)...best bet for eapcc is to do a jpy/kes currency swap...

@ VVS

dude all banks in kenya have approached eapcc to do this hedge but they preffered to bury their heads in the sand...a currency swap would have cost them all of 900 miliion,amortised across the life of the swap...pricey yes..but consider this..theyve lost 5 bn kes on ravaluation to date...
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Mtu Biz
#16 Posted : Thursday, July 30, 2009 2:05:00 PM
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Joined: 1/16/2007
Posts: 1,320

I have closely considered the arguments put foreword by Hi-Lo and VVS and have concluded thus.


I may be semi literate.

..... the sons of Zeruiah .....
Sola Scriptura
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Kaigangio
#17 Posted : Thursday, July 30, 2009 3:36:00 PM
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Joined: 2/27/2007
Posts: 2,768
why isn't anybody answering mtaalam's question: what is eabl doing in Tz?

NEVER TALK OF A RHINO IF THERE IS NO TREE NEAREBY - ZULU PROVERB
...besides, the presence of a safe alone does not signify that there is money inside...
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