though rental income will not remain static for the next 30years, the coupon however will

theres also a risk that in 30 years teh country u know as kenya may cease to exist.....if u think im talkin nonesense ask the guys holdin the ivory coast euro bond..this argument is not about risk per se..its about return

@ All
I tend to agree with @ Kizee1. 12% is TOO low for 30 years.
If you look at the latest 10 year bond dated 31/1/2011, the coupon was 9.307%. However the yield was higher at 9.683%.
Interesting fact was that bids were 17,694 Billion. However CBK only accepted 1,086 Billion. That is only just over 6% of bids !!!

Why. I think investors have seen that the government is hungry for local funds. The investors sense this and putting in higher bids.

If you look at the 91/ 182/364/ trend, yields have been going up since Oct. 2010.
I dont see this trend changing any time soon.

Also dont forget that in 2008, 182 day bills were paying about 9%

It IMO that the 30 year bond will have a lot of bids, but CBK will only accept a very little proportion. Unless it is in dire needs of funds.

Which ever way it goes the coupon is 12%, but the actual yield will be much higher - maybe 14%.

I think in a few years, we may see 2 year bonds giving 9% yields.
My 2 cents - though I manage a few clients who invest with CBK.

If I had the cash I would. I however don't think it's worth investing less than 2m. I know the biggest fear is inflation but think about it, where would you invest to beat inflation by 100%? Nowhere and we all know that the worst it can get is around 5% so 12.5% is pretty good. Ama?

@ Kizee1 & 2012.
Let me give you my thoughts on this .

Interest rates are going UP. And will continue to do so for untill ènd of 2012. After that who knows ?

@ year bond issue 2/2009/2 dated 25/05/09 had a coupon of 8.7505.
But the yield was 10.193%.
Check it if you want to.
Interest rates WILL go up. The Government is Hungry. Elections are are coming soon .
Interest rates WILL go up every week. Mark my word.

No offence meant to anyone who has a different view.

Regards and sleep well.

The w/tax is 10% of the coupon but that is 1.2% no matter what the yield...

My friend, nobody can honestly answer that question but it's not looking good at the moment.
1. The Meteorological Dept. is predicting doom as always
2. Next year is election year and you know what that means to the western world
3. The CBK Governor's term is coming to an end and we don't know what Kibs intends to do.
4. The PM having drastically dropped in popularity is spreading fears of war in 2012.

I humbly withdraw that statement on 5%.

ok mr 2012...wats ur short term view on rates? maybe u cud scalp ur bond position and make a coin