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MINIMUM AMOUNT I NEED TO INVEST IN BONDS
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Wondergirl
#1 Posted : Tuesday, June 22, 2010 1:08:11 PM
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Joined: 9/12/2009
Posts: 312
Help me out!
I have been investing in shares but not bonds. I want to diversify by investing in them, however I know little about them.
My questions are:
1. Do I just place an order with my broker like I do with shares?
2. Do I get to choose which bond I get into? Just like I choose the company whose shares I want to buy?
3.Are they tranferable like shares in case I want to dispose them?
4. What is the minimum amount I need.( I want to start small)
5.Any other valid information is welcome.
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the deal
#2 Posted : Tuesday, June 22, 2010 1:14:21 PM
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Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
50k
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benzi
#3 Posted : Tuesday, June 22, 2010 2:16:43 PM
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Joined: 1/8/2010
Posts: 33
Location: nairobi
To invest in GOK bonds you need to open a CDS account from Central Bank

You can place order from Central Bank once they advertise or there outhorised agents.

Actually there was one whereby today is the last day to place orders and its interest rate is 11.75 %.

Minimum amount is 50k

You can liquidate the bond anytime in the NSE but this is done by investment bankers.
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Wondergirl
#4 Posted : Tuesday, June 22, 2010 4:24:09 PM
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Thanks guys.
I will talk to my Broker(Faida)
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sparkly
#5 Posted : Tuesday, June 22, 2010 4:32:54 PM
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Joined: 9/23/2009
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Location: Enk are Nyirobi
Wondergirl wrote:
Thanks guys.
I will talk to my Broker(Faida)


If you want to buy primary (directly from GOK)go to CBK and get CDS opening forms first.
Life is short. Live passionately.
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poundfoolish
#6 Posted : Wednesday, June 23, 2010 1:06:39 PM
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Joined: 12/2/2009
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Location: Nairobi
Interesting topic

are there different types of GOK bonds. like above 50K and what is the maturity time span?

better still.. any links to where we can easily read this stuff?
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sparkly
#7 Posted : Wednesday, June 23, 2010 1:12:54 PM
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Joined: 9/23/2009
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Location: Enk are Nyirobi
poundfoolish wrote:
Interesting topic

are there different types of GOK bonds. like above 50K and what is the maturity time span?

better still.. any links to where we can easily read this stuff?


Pass by CBK, they will be so eager to explain to you.

Anyway you buy min of 50K and additions of 50K. so you can have 50K, 100K, 150K etc
Life is short. Live passionately.
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The optimist
#8 Posted : Wednesday, June 23, 2010 4:46:57 PM
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fantony
#9 Posted : Wednesday, June 23, 2010 5:28:21 PM
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Joined: 11/6/2006
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good topic (clapping emoticon) i have also been wondering.. thanks all
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kizee
#10 Posted : Wednesday, June 23, 2010 5:50:54 PM
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rememeber the bonds market isnt OTC, the secondary market that is...gettin a broker to do 50k trades will be hard, the comission doesnt justify the effort..and the price makers would be hard pressed to price you in 50k
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chikita
#11 Posted : Wednesday, June 23, 2010 6:31:02 PM
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Joined: 2/18/2010
Posts: 94
Location: Nairobi
Quite insightful! I must say.
Has anyone here ever thought of enlightening fellow Skerians on investing plans in kenya?
I would be interested, even if its for a fee!
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maka
#12 Posted : Thursday, June 24, 2010 12:38:49 PM
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Joined: 4/22/2010
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Location: Nairobi
@benzi the issue was actually oversubscribed due to excess liquidity in the financial sector.The CBK needed 7B but recieved bids totalling 27B that definetly speaks a lot about the financial environment.
I believe fund managers do trades for those odd lots but they usually accumulate clients oreders then sell them as a bulk
possunt quia posse videntur
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mukiha
#13 Posted : Thursday, June 24, 2010 1:26:33 PM
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Joined: 6/27/2008
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I used to buy T-Bills (not Bonds) during the immediate post-goldenberg days (early to mid 1990s). Interest rates were hovering around 30% to 40%. At one time they had reduced the minimum to 10k.

Bonds are good if you have floating cash. They are much better than bank fixed deposits. The only catch is liquidity for small amounts - below a million bob.

They are normally issued monthly while Bills are weekly. The 5-yr one dated 28th June 2010 closed selling on 22nd.

Just wait till next month; there will be another one.
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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drake
#14 Posted : Thursday, June 24, 2010 5:39:08 PM
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Joined: 8/8/2009
Posts: 170
Total turnover in the Bond market yesterday was 6.12 B on 68 deals. A mean of ~89MM per deal which should give you an idea of just how tiny 50,000 BOB is (pooling or no)

Here's my GRD 0.02 ...

If part of the reason you want to diversify is to speculate on interest rates (and you're a bit late to the party) or to "hedge" equities, then consider investing in a professionally managed bond fund instead. The underlying pool of securities is bonds but you probably have little choice over which ones.

E.g Old Mutual Bond Fund
Dyer & Blair Bond Fund
Stanbic AM (?)


You can get in for much less (was ~ 200K for Old Mutual) and they're highly liquid as you can redeem your investment at the prevailing/closing unit price. It works similar to a unit trust.

E.g.
Yesterday's unit prices for Old Mutual Bond Fund
Buying - 114.14 / Selling - 116.47

If, however, your aim is fixed income, consider a fixed deposit account instead. I've noticed that postbank is still advertising 8.5% p.a on 100,000 fixed. GoK yield for 364 day T-Bill is ~ 5%....and postbank is implicitly fully backed by faith and credit of GoK so I might be so bold as to claim PostBank fixed deposit is "almost risk free" Drool

*Disclosure : I'm not affiliated to any of the companies mentioned.
PostBank rates on fixed deposit may have changed.

Links:
http://www.oldmutualkeny...s_detail.php?news_id=24
http://www.dyerandblair....hp?dyer_blair=Bond-Fund
http://www.postbank.co.k...ches/fixed_deposit.html

http://www.nse.co.ke/new...0Prices%2023-Jun-10.xls
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sparkly
#15 Posted : Thursday, June 24, 2010 9:21:44 PM
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Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
@drake good one. Do bond funds give a cash return or do you only realise a gain by selling?
Life is short. Live passionately.
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kyt
#16 Posted : Thursday, June 24, 2010 10:42:03 PM
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Joined: 11/7/2007
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other than the interest rates_which are ok by the way_ what or how else does one make money from bonds.
LOVE WHAT YOU DO, DO WHAT YOU LOVE.
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Scooby
#17 Posted : Friday, June 25, 2010 4:47:37 AM
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Joined: 9/2/2006
Posts: 121
Hi Kyt,

You could make money by getting them in the primary market through CBK auctions like this months T-bon auction. The challenge with that, as someone alluded to earlier is being able to sell the bond in the secondary market - especially if you are a retail investor.

What I would advise you is that participate in bonds if you are keen to stabilise your investment returns - assuming that you own shares.

The trouble with bond funds, is that you will not get an "optimal" return due to the high annual administrative costs of managing the funds - not forgetting the initial charge. For the 200k that it would cost you to enter into one, how about buying at least 4 treasuries (or even KenGen and Safaricom) and getting after tax return of 10%.

I've been doing that for the past couple of years - and so far, so good.

Regards
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