By JoNews Reporter
THE City of Johannesburg has launched its first bond - worth R700-million - under its ground-breaking public borrowing programme to raise R6-billion from capital markets over the next five years.
Launched on Wednesday, 21 April, and showing a good level of investor confidence, the issue was 3,8 times over subscribed and cleared 154 basic points above the benchmark of R157.
"The confidence shown by investors in the City is welcome and should encourage other municipalities to use the capital markets for infrastructure financing," said mayoral committee member for finance strategy and economic development Parks Tau.
The bond is the first to be issued under the City's Domestic Medium Term Note programme, a programme to raise debt instruments to meet its capital expenditure needs.
"Proceeds of the bond will be used for capital expenditure to address infrastructure backlogs," according to Tau.
The bond will run over an eight-year period, with a redemption date of 2013, and extends the ability of the City to issue bonds without government or third party guarantees.
This follows the successful issuing of two bonds amounting to R2-billion last year.
City Treasurer Jason Ngobeni said it was the intention of the City to issue longer term bonds, up to 30 years to match the asset life of its infrastructure investments, at a later stage.
Early this year, the City appointed a consortium made up of Standard Bank, Barnard Jacobs Mellet and Legend Capital to set up a Domestic Medium Term Note programme, while a second consortium comprising Absa, Barclays Bank, and Vunani Capital was chosen to manage the inaugural issue under the programme.
For more information contact William Mathamela on 011 242 1040.
Source: Jonews
RELATED STORY:
Presentation for Seminar
