The City of Johannesburg is the largest metropolitan city in the country and regarded as the economic powerhouse of South Africa, and that of the African continent. Joburg contributes over 16% to SA’s gross value added, and also accounts for over 16 percent of the national employment. A leader and key player in the economy - we are a world class African city!
The City continues to follow a policy of upgrading its facilities and as such requires funding the normal levels of replacement capital expenditure while ensuring a smooth flow of its normal service delivery operations. The Treasury division – the City’s central banker - is tasked with ensuring that our municipality is financially sound and committed to excellence and service delivery, and always strives to ensure that budgeted funds are made available in time to support the City’s mandate to residents, investors and South Africa.
The role of Treasury is to provide liquidity to CoJ and its MOEs by sourcing the most efficient financial instruments at the best price and to administer and account for such instruments within the bounds of this policy. Treasury personnel have the skills to support the City’s on-going financial risk management activities and to ensure that these are carried out in the best interests of the City.
The realisation of the City’s business strategy depends on Treasury being able to take calculated financial risks within the City’s risk tolerance. Sound management of financial risk enables the City toanticipate and respond to changes in the market environment, as well as make informed decisions under conditions of uncertainty.
As the City’s central banker, our vision is to ensure that at all times the various City departments have enough funds to undertake its activities, all which contribute in achieving the mandate of efficient service delivery to all the residents of Johannesburg. All we are saying is: we are taking our inhabitants along with us to greater heights.
We have a singular focus – to remain a world class African city.
About City Bonds
The City of Johannesburg has, issued seven bonds since 2004. Since then, the municipal bond market in South Africa has expanded significantly due to the need for the metros cities to finance large scale infrastructure projects in the context of limited resources from the national government. This direction is likely to be maintained in the medium term, given the interest shown by domestic investors in this relatively new class of debt. This positive growth prospect affirms bond issuance as a major source of funding over and above traditional bank lending.
The bonds, all listed on the Bond Exchange of South Africa, are:
COJ 01 - A R1-billion, unsecured bond maturing in six years. Launched in 2004, it won the coveted Bond of the Year Award from Besa in that year. This bond has since been redeemed.
COJ 02 - A R1-billion, partially guaranteed bond maturing after 12 years. It is partially secured by the International Finance Corporation and the Development Bank of Southern Africa. It was issued in June 2004.
COJ 03 - A R700-million, unsecured bond maturing after eight years of issue. It was the first to be issued as part of the City's Domestic Medium Term Note programme. It was issued in April 2005.
COJ 04 - A R1,2-billion, unsecured bond maturing in 12 years from issue and the second to be issued as part of the Domestic Medium Term Note programme. It was issued in May 2006.
COJ 05 - A R1,8-billion, unsecured bond maturing in 15 years from issue; June 2023. The bond was tapped December 2008 for R468-million.
COJ 06 - A R90-million, unsecured bond maturing in December 2015.
The Domestic Medium Term Note (DMTN) programme allows the City to issue up to R6-billion in municipal bonds up to 2010, without having to provide additional documentation ahead of each new issue.
Municipal bonds are debt obligations issued by government entities to members of the public to generate income to meet capital expenditure.
The issuer of the bond guarantees to pay interest (coupons) at set periods and to repay the principal debt on a specified date. The interest paid on the bond in tax deductible. Issuing bonds is standard practice for cities in the developed world.
Johannesburg is rated by two multinational credit agencies. Improved credit ratings help reduce debt servicing costs as a percentage of overall expenditure.
Joburg uses most of the funds raised by the bond issues to finance its capital expenditure backlog. The City's capital expenditure backlog is estimated at R8-billion.
About Jozi BondsResidents can invest in the city via municipal bonds the City has issued.
Known as Jozibonds, the City's retail bonds are savings products that give private individuals, trusts, stokvels, close corporations, companies and other legal entities an opportunity to invest in municipal-issued securities at competitive and market related interest rates.
They are backed by Johannesburg's credit and represent a low-risk investment. The retail bonds will be listed on the Johannesburg securities exchange, JSE Ltd, which will regulate the City's conduct as issuer of the bonds, and so will ensure that the investment is safe.
The objectives of the retail bonds are:
To create a "Proud Johannesburg Resident" campaign whereby Joburg citizens can invest directly in the City and enhance service deliveries, as the funding will be used for capital projects;
To diversify the financial instruments available to investors;
To establish a different source of investor base;
To involve the residents in funding the City's capital expenditures; and
To promote a savings culture in line with national objectives.
The benefits of the retail bond to the investor are:
Retail bonds will provide people with a safe investment option, offering better interest rates than other savings schemes;
Residents can invest directly in the City and enhance service deliveries, such as providing better roads, providing better healthcare, or providing water and electricity to all residents; and
The bonds promote a savings culture in line with the national government, to save for an education, a house or a car.
The benefits of the retail bond to the City are:
They will provide the City with a source of income to improve service delivery.
Types of Jozibonds
Jozibonds are available in three maturities:
Two years (two-year Jozibond);
Three years (three-year Jozibond); and
Five years (five-year Jozibond).
The maturity refers to the term of investment, or the length of time before your investment capital is repaid to you. The retail bond you choose will depend on how long you want to save your money, and what the interest rates for the different retail bonds are at the time that you want to buy. Access to three different maturities allows you to choose the investment term to suit your needs.
Investor Roadshow Presentation 25-27 February 2019
Features of the Jozibonds
Frequently Asked Questions
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