June 23, 2004
By Thomas Thale
THE R1-billion municipal bond issued by the City of Johannesburg on Wednesday attracted bids totalling R2,3-billion, making it 2,3 times oversubscribed.
Jason Ngobeni, City Treasurer, said the bond coupon was fixed at R157 Government bond plus 164 basis points.
Bidding for the bond opened at 9am and closed just before lunch. Britain's Barclays Bank, the lead managers of the bond, tabled its recommendations of the final price and structure of the bond before a special sitting of council on Wednesday.
Council approved the final price and structure of the bond.
This is the second bond issued by the City this year. In April, the City successfully issued a R1-billion unsecured bond.
Ngobeni said the new bond carried a 40 percent partial guarantee from the International Finance Corporation and the Development Bank of South Africa.
"This is the first partially guaranteed bond on the market," said Ngobeni before the issue.
Fitch Ratings, an international ratings agency, recently assigned a rating of AA- to the bond, a little higher than the city's rating of A-.
Quinton Zunga, a bond adviser from Barclays, said the bond would be redeemed over the last three years in semi-annual installments.
Although the auction was held on 23 June, the bond would only be settled on 29 June, Zunga said.
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