Hunderwear,

In your scenario, there are two things to consider. Firstly, there is a straight 12% gross interest that you will be entitled to each year. That amount will fall to 10.8% after tax.

Secondly, since you bought the bond at a discount (i.e. less than face value), the value of your bond will gradually increase over time till it reaches face value on maturity. That's a form of "capital gain" should you decide to hold it to maturity.

You could then say that the 15.5% is then made up of the 12% interest and remainder as a capital gain.

As regards your question of when is the opportune time to buy the 30 year bond, I would advise that you hold out for a while till the movements in the yields kinda stabilise. Had you bought it at 16.3% yield, you would have lost 2.5% as of yesterday (i.e. Thursday). The yield on this month's auction for that bond was 18.8%.

Hope this helps

Pretty difficult any amount less than 100 mio is considered as an odd lot.Banks usually trade in lots of 100 mio and above...

I reckon that I get 12000ksh. on getting the bond at the current market value(around 67) and not 100(par value).Is this the case?

Yes but remember you would have bought the share at a disount,way cheaper...for every 100 you pay 67

Ksh100,000 is not money to be invested in bonds.If I were you;with inflation over 15%,I would buy some stocks at current prices.....or I would buy TUSKERS and forget I had it.