The City of Tshwane returned to the Bond Market after an absence of five years, having last been in the market in 2013. On Tuesday 26 June 2018 the City was in the market to auction its fourth listed bond, following an extensive roadshow to investors located in Johannesburg, Tshwane and Cape Town. The City came to the market to raise a 10-year maximum R1 billion bond at a set pricing of 180 basis points above the benchmark Government bond, the R186. Eleven investors submitted bids amounting to R2, 102 billion, well in excess of the required R1 billion required, demonstrating the strong demand Tshwane’s quality paper.
The City is delighted by the response from investors and the positive market sentiment which was boosted by Moody’s review of the City’s long-term rating outlook from negative to stable. A total of seventeen bids were submitted and seven of these offered R1, 6 billion all within the set pricing of 180 basis points, a further demonstration of the keenness of investors to soak up Tshwane’s paper. This left the issuer, Tshwane, in a position to allocate its paper to bidders within price range, on a pro-rata basis.
This means that Tshwane had to decline R1, 102 billion worth of bids by investors who had wanted to buy its paper, but offering very expensive pricing. Tshwane has always made it very clear through their Lead Managers ABSA Corporate and Investment Banking that they are implementing strategies of cost cutting and revenue enhancement in line with our Financial Sustainability Plan. With this resounding success in the capital markets, Tshwane has demonstrated its commitment to turning around its financial situation and placing its financial sustainability on a solid growth path.