Smart Investing with Nosa

On Friday 29 th May, 2020, one of Africa’s biggest banks, United Bank for Africa Plc (UBA), issued a notice of early redemption to investors, exercising the call option attached to the bond at the issue date, thereby informing investors that the bond will be redeemed on 30 th June, 2020. The bond has a principal amount of N30.5 billion (around $84 million, at an exchange rate of N365 to a dollar), coupon or interest rate of 16.45%, and was issued for a 7-year term with a maturity date of December 2021. In this piece, I will explain the meaning of an early bond redemption, the mechanism which makes it possible for a bond issuer to redeem the bonds before the initially agreed redemption date as well as the implication for investors. What is a Bond? A bond is a fixed income instrument representing a loan made by an investor to a borrower (issuer), with the issuer promising, in writing, to make an agreed stream of periodic coupon (interest) payments, as well as to return ...

“‘Tatty’ (thirty) billion for the account…”. It is fair to say that these words made the famous song “If” by Nigerian afro-beats sensation, Davido, the success that it was. In hip-hop, R&B and afro-beats, where bragging about riches and success is by far the most popular theme, there have not been many songs or musicians who have been able to express this theme as effortlessly as Davido did in “If” (Don’t be dismayed if you do not know the song. Here’s a YouTube link for your listening pleasure). The video to the song was published on YouTube in February 2017. At that time, if Davido truly had 30 billion naira in his bank account – which he has confirmed he did not have -, it would have been worth around 99 million US dollars. Today, that same sum would only be worth around 77 million dollars and is likely to be worth a lot less in another three years. I do not plan on writing about the devaluation of the naira today, besides, I already shared some of my views on this topi...

As promised in my last article, Investing during a global recession , today we will explore one of the most important investment vehicles for individuals and institutions – mutual funds. Despite their popularity, mutual funds are often misunderstood or understood only in a limited extent, even by many individuals with mutual fund assets. What are mutual funds? Mutual funds are comingled or pooled investment vehicles through which investors gain access to securities like stocks, bonds, money market instruments and other assets. In a mutual fund, each investor has a pro-rata claim on the income and value of the fund, referred to as net asset value. What are pooled investment vehicles? A pooled investment vehicle is one in which many different investors (individuals, pension funds, corporations, university endowments, etc.) contribute money to the pool to be managed, often by professionals, to achieve specific investment goals or strategies. There are various types of ...