REPUBLIC OF SOUTH AFRICA - Introduction of long-dated inflation-linked bonds and recommencement of switch auctions

Introduction of long-dated inflation-linked bonds and recommencement of switch auctions

REPUBLIC OF SOUTH AFRICA
Department of National Treasury
Issuer code: BIRSA
(“National Treasury”)

INTRODUCTION OF LONG-DATED INFLATION-LINKED BONDS AND RECOMMENCEMENT OF SWITCH AUCTIONS

Introduction of long-dated inflation-linked bonds

As advised in the SENS announcement published on 23 February 2023, the National Treasury
reduced the inflation-linked bond auction levels by R200 million to R1 000 million with effect from
31 March 2023.

The reduction in the auction levels was intended to allow the National Treasury to reconstruct the
inflation-linked bond curve, while increasing the prominence of the floating rate notes in the overall
portfolio, which was followed by the introduction of the I2031 (4.25%; 2031) bond into the domestic
mix.

To further support this objective, the National Treasury will introduce 20 and 35-year inflation-linked
bonds in September 2023.

Recommencement of switch auctions

The National Treasury has recommenced its switch auction programme, with the first auction
scheduled for this afternoon, 17 August 2023 (“First Auction”). The First Auction will focus
primarily on fixed-rate bonds.

To sustain the optimal funding mix and contain the overall costs associated with switches, the
National Treasury will introduce cross-product switches. The auctions are envisaged to commence
in the September 2023 auction and exchanges will be between fixed-rate bonds and inflation-linked
bonds.

The cross-product switches will not constitute separate switches but will be incorporated into the
existing switch auction calendar. This means that at future auctions, multiple source bonds could
be introduced per auction. To accommodate the increased number of source bonds, the indicative
amount on offer may need to be adjusted to allow for more flexibility on the part of the National
Treasury. This will be communicated ahead of the relevant auctions and adjustments will be made
to the terms and conditions of the switch auction.

Details of the source and possible destination bonds will be outlined in the auction announcement
letters as per the terms and conditions of the switch auction programme.


For further enquiries contact:

Terry Bomela-Msomi
Director: Debt Issuance and Management
012 315 5753 / +27 66 289 2492

Pretoria
17 August 2023

Debt Sponsor
One Capital

Date: 17-08-2023 11:17:00
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