One of the hallmarks of the financial meltdown currently going on in the US were the securities that promised high returns in dollar terms for minimal risk. You could get apparently AAA, basically risk-free investments, that yielded 10% per annum. The argument then, was that they had done all the necessary risk mitigation to guarantee such a result. Obviously in hindsight this was not the case as most of those AAA securities turned out to be worthless.

So flash forward about a year and I get in my inbox an invitation to invest a minimum of $50,000 in a fund guaranteed to return the equivalent of 19% a year over a three year period. Now I basically ignored it, figuring that it was a Madoff in the making. However I heard my colleagues talking about it, and decided to take a closer look. It actually is a pretty good transaction however it is not "guaranteed" or "risk free"

So the transaction is basically this - FSDH an independent capital market player with its hands in a lot of things in the Nigerian market wants to offload a portion of its holdings of the GT Bank Eurodollar bond (it may be the entire stake, I don't know). However it also wants to leave itself the possibility of making some significant upside. So it comes up with a "win-win" transaction.

The GT Bank bond is convertible - basically it can become shares. So FSDH says that if you give us your money for three years, we will pay you all the interest that GT Bank pays us. After three years we will turn the loan into shares, sell those shares and pay you a certain amount.

Sounds like a great deal, GT Bank is definitely going to be in existence in three years, so where is the risk? Well there are two risks. The first is obviously that GT Bank may not be in existence in three years - highly unlikely but still possible. The second risk is around the conversion.

FSDH has commited to a conversion amount. The way convertibles work is that there is an agreed price at which the loan converts into shares. Now FSDH is planning on selling those new shares and paying you cash. However if the price of GT Bank is less than the conversion price, they may not be able to pay you the amount they commited to pay you.

FSDH is taking the view that GT Banks share price will be higher in three years and that they will be able to sell the shares for more than the amount they promised you and keep the excess, thus making money twice on the transaction. After all you are paying them a premium on what they paid for the bonds in the first place.

As I said it is a win-win transaction for both people, though it does have quite a bit of market risk (with regards to GT Bank's share price) and obligor risk (with regards to FSDH). In addition to there might be significant exchange rate risk depending on the value of the naira at the end of the three years.

As I said at the start, it is a good transaction but not for the faint hearted. Still it is good to see derivative financial products of this nature being produced in our market. Our financial development countinues apace. Now if only the stock market will stop misbehaving then we will all be alright ;)

Now this question is only relevant for those of you who can still put on a semblance of a Nigerian accent. When I say "semblance" I mean "semblance." Trust me you do not sound as Nigerian as you think. For the rest of y'all you are just not there yet.

In general I tend to sound as Nigerian as I am able (which as I am told is very razz :D) However I still have that irritating tendency to turn on the phonee in certain situations if I am not thinking about it. I have come to realise that this is not limited to me, but to the majority of returnees in Naija (also a returnee phrase I am told) stumbling around trying to find their way.

The first situation is what I call the government interaction syndrome - you know when you are dealing with the government of the foreign land that you are in you automatically start dropping that serious speech. GIS caught out many a returnee during their first few encounters with government officials in gidi, you know LASTMA, immigration, police and so on. However after exorbitant taxes were paid, people stopped falling for the GIS like that. As an aside one of my friends on full GIS tried to talk his way out of driving the wrong way down a one way street. Look at the bright side he at least did not end up in the psych ward for mandatory testing.

The second situation is as relates to the service industry. It kind of happens like this, you roll through a restaurant or a bar, and during the course of generally horrendous service your accent gets more and more clipped until you are cutting glass on the posh. It 's kind of funny to watch actually, and usually there is generally a "this would never happen if I was in..." thrown in. I tend to call this the "please don't let them spit in our food" situation.

The third situation is the gate crash. You know, you and your friends are rolling through a zone that you are not really supposed to be at. The house party or wedding that you weren' invited to, or the VIP that you are trying not to pay for. You walk up to the bouncer saturating the zones with phonee so thick that you can breakdance on it, nodding to the bouncer as you breeze past on your phonee cloud. The one fun thing about christmas is that all phonee clouds are punctured albeit breifly.

The fourth situation that I shall mention should be obvious to anyone who runs around in Las Gidi (another returnee phrase). It's the blocking phonee, or as we like to call it the BP. It is truly tragic the number of high BP cases there are in Lagos today (C'mon you know you liked that pun). It is a standard thing, you hear a guy yanning with his friends like he just dropped out of AJ and then five minutes later you would have sworn that he was from Sandhurst. I am told it used to work in the past, but that was before my time, and I've been here a while. Now most girls think "loser", or for the unlucky this happens

The last situation I would mention also happens to be my favorite, I call it IP or more particularly isho phonee. You know when some random guy hits on a returnee girl, and she is having none of it. She tries all the standard smiles and sturves, but the dude a'int getting the message. She eventually turns it on and cuts him dead. It's a beauty to watch

Aiight I'm done, however if you have any instances of inadvertent phoneeing please feel free to share with me. Oh and I will also ignore all corrections of my interpretation of the spelling of "phonee" My blog My rules :D

INTRO

Is it bad of me to wish y'all happy new year on the 19th of January? What can I say other than... you know you love me? C'mon y'all you know you love me. nudge nudge wink wink :D

Aiight so while I haven't forgotten the whole Aijuswanaread thing, I will be starting the year the same way I started last year; with my dear readers top ten posts of the last year.

Just like last year the following caveat applies

Caveat

Most people come straight to my home page as opposed to the individual pages so these may not actually be the top ten posts. However having had an additional year of data to look at I am more confident that these top ten bear some resemblance to the truth

And just like last year I will be running commentary on your choices. So without any more demo, here are your top ten posts of 2008... Oh one last thing, unlike last year I'm starting with number ten not number 1... it makes more sense that way it seems :D

YOUR TOP TEN

10. Friendship

Now this struck me as rather random cos it's one of my first posts from 2006 and it only got one comment at the time, and that was Mona promising to hook me up. Anyway it is notable for the coining of a phrase that I still use "predatory churchgoing" and one that fell by the wayside "Idowu tayloring". Oh and also notable for me admitting that I was an idiot, but I guess that you knew that already

9. Sunday Corper 1

Ah how the mighty have fallen. This was number 4 last year. Oh well these things do happen. I suppose enough time has passed that I am no longer the wierd guy that publishes a series called Sunday Corper on Monday. Anyway glad you still like it... even though not as much as you did last year :D

8. Private Sector, Government and Taxation

I wondered why this post was on here until I read it. I swear I read it and I was like "I didn't think I was this good" Omodudu's comment basically is on point :D So here is to you my discerning readers :D

7. Separating Equilibrium

This is kind of a relationship theory post. Though it was one that relied heavily on audience participation to make it work. My readers, meaning you guys brought your "A" game on this one cos the comments on the post are the hotness. With all those witty comments I even got propositioned :D

6. On the Skye Bank Shelter Fund

With the rumblings in the Nigerian real estate market this post is looking better and better. Hey it's not patting myself on the back, clearly y'all liked it too :D Anyhow I haven't heard much about the fund, but its listed so i'm sure it got killed in the current market downturn.

5. My Nigerian Revolution

This post was inspired by SolomonSydelle, the Grand Dame of Nigerian blogging :D As you can tell I'm clearly not a fan of revolutions :D If you are the drama loving kind then there is something for y'all in the comments. It's good to see that Fashola is the living embodiment of the incrementalist ideal. It is also heart wrenching to know that so much could have been done in the past eight years if the other governors were like him. Oh well, muddling forward is what we do.

4. Prelude to a Fraud

Well last year's number 1 has dropped a few places and there has been no more mention of this project in the papers, though Delta State has recently announced a $4.5 billion project to do something similar. The link to the businessday article has gone, even though they redid their website and that may have screwed up the linking system. Good to know that people are still reading this post.

3. On Your Kneels

This was almost a given I feel, judging by the response it got when I published it. The comment totals were like my 2007 heyday:D With your level of outrage you would have thought that it was y'all that they asked to get on your kneels :D There was also the odd gramarian or two that wanted to know if kneels was indeed correct english :D

2. Hot Girl Syndrome

One of the two upward movers in this year's countdown. What can I say about this post... other than that broda was inspired :D I suppose I should stop posing with this post, but you know you love it too :D

1. Sunday Corper 2

Now this was a surprise to me too. I want to go round you people and start shaking you, but I suppose that is what democracy is about, no? I went to read it again and see what the deal was, but i still don't get it. I mean the post doesn't even have one comment. Still it is what it is, Sunday Corper 2 was the number 1 post of the year 2008.


CLOSING

So there you have it, your top ten of 2008. Clearly I did not put in as good a shift as I could have done this year because only two 2008 posts made it into the top ten. I promise that I will aspire to do better in 2009. So thank y'all for sticking with me through '08 and here's to a great '09. Laters.