November 9, 2004
By Thomas Thale
THE R1-billion unsecured bond issued by the City of Johannesburg in April has scooped the coveted Bond of the Year Award from the Bond Exchange of South Africa (Besa).
The COJ01 bond was voted the Best Debt Issue of the year at the annual Spire Awards held recently at the Park Hyatt Hotel in Rosebank. Another city bond, COJ02, a partially secured R1-billion, 12-year bond issued by the City in June, also made it into the top three. The other finalist was Barloworld Limited.
The Best Debt Issue of the year is one that is "visible, well received and taken up by the market", explains Nuala Keogan, manager of international products at I-Net Bridge, sponsors of the awards for the third year running.
When it was issued, the COJ01 bond was over-subscribed by 50%. Proceeds were to go towards refinancing the city's debts and recapitalising its ageing infrastructure. The bond started trading at 230 basis points above the Government R153 in the secondary market, but has since come down to 160 basis points.
Jason Ngobeni, the City's treasurer, hailed the award as a vote of confidence in the municipality. "It is extremely comforting. We are pleased that we could package a debt security of that quality. It is a great achievement for the city, its capacity to manage this kind of instrument and its long-term economic strategy."
The award comes at a time when the municipality prepares to go back to the market to issue a Domestic Medium Term Note to raise R6-billion.
The efforts of the City's treasury department were recently recognised when Ngobeni himself made it to the top three finalists for the best Treasurer of the Year Award from the Association of Black Securities and Investment Professionals (Absip).
Ngobeni said the performance of the bond "should encourage other municipalities to find alternative ways of funding and not just rely on bank loans".
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