Bond for 'ordinary South Africans'
18 May 2004
The National Treasury has launched the new RSA Government Retail Bond, a no cost, secure, risk-free investment for ordinary South Africans which offers bond market returns directly to the public.
According to the National Treasury, the main objectives of the RSA Retail Bond are to:
- Diversify the financial instruments on offer to the market by the government;
- Target a different source of funding for the government; and
- Create an awareness of the importance of saving among the public.
Returns in the government bond market have outperformed the rest of the market for the past 10 years, the Treasury said.
"With the addition of the RSA Retail Bond to the National Treasury's already diversified portfolio of financial instruments on offer, ordinary citizens now have the opportunity to benefit from similar returns", it added.
Interest rates on the RSA Retail Bond will be priced off the government bond yield curve, while
the prevailing interest rate of the Retail Bond will be fixed from the date of purchase until maturity.
If the rates move more than fifty basis points during a month, new rates will be determined for the following month.
The new rates will be published on the RSA Retail Bonds website, the National Treasury website, in the press and at Post Offices countrywide.
The public can buy two-year, three-year or five-year maturity retail bonds, or a combination of these three bonds, with a minimum of R1 000 per bond.
Finance Minister Trevor Manuel said the government aimed to encourage South Africans to save.
"This would place us in a stronger position to maintain macro-economic stability, because that in itself will attract foreign direct investment", Manuel said.
The bonds are targeted at the 11 million South Africans who fall under the Living
Standards Measure of 5-8, and are aimed at diversifying people's investments portfolios.
The head of asset and liability management at the National Treasury, Phakamani Hadebe, said the bonds provided a secure, risk-free investment opportunity for ordinary South Africans.
"We want all South Africans to be masters of their own future. If you get anything better than this, let us know", Hadebe said.
The first bonds will be issued on 24 May, and members of the public can buy these at any post office, or:
- Online at the RSA Retail Bonds website.
- By posting an application form directly to: The Head: Asset and Liability Management Division, National Treasury, Private Bag X115, Pretoria, 0001.
Payments can be made through SA's four major banks: Standard Bank, Absa Bank, Nedbank, First National Bank.
Only South African citizens or permanent residents over the age of 18 are allowed to
purchase the bonds, and applications must be accompanied by:
- A valid South Africa ID book (driver's licences and passports are not acceptable);
- Personal bank account details;
- An amount of not less than R1 000 and no more than R1-million; and
- A duly completed application form.
Source: National Treasury
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