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South Africa: Bonds Sold Off the Shelf
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Business Day (Johannesburg)
16 April 2008
Posted to the web 16 April 2008
Renée Bonorchis
Johannesburg
WITH savings at a mere 1,4% of household income, the national treasury said yesterday it would help by distributing its retail bonds through Pick n Pay.
"We're aware that money is tight in many households ," Finance Minister Trevor Manuel said in Johannesburg.
Retail bonds have been available through the Post Office since 2004, but in an attempt to reach more people, Pick n Pay CE Nick Badminton supported the sale of the bonds through the retailer's financial system, which operates Go Banking.
There are no fees and no commissions payable by those who want to invest from R1000 to a maximum of R1m in the bonds.
Investors can hold retail bonds with maturities of two, three, five or 10 years depending on whether they choose to go into inflation-linked bonds or plain fixed interest.
The yield on the five- year fixed interest bond, for example, is 10,25%, so an investment of R1000 would pay out R1648 over five years.
Since the bonds were launched, 18400 people had invested R2,3bn in them, said Phakamani Hadebe, deputy director-general, assets and liability management, at the treasury. Many had elected to reinvest the interest.
The bond market in SA is mostly closed to individual investors but domestic bonds are one of the safest ways to save, especially if they are government bonds .
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The treasury was considering how to extend the bonds to stokvels.
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