CAPE TOWN – The National Treasury announced on Thursday that the fixed-rate and inflation-linked bonds weekly auction increased by R1.2 billion, from R3.3bn to R4.5bn.
Treasury said that Eskom's R59bn bailout and the preliminary indication of tax revenue shortfall announced by the finance minister in the special appropriation bill speech last week had prompted government to revise its funding strategy and an increase in government's borrowing requirement for the 2019/20 financial year.
The ministry said in its statement that the inflation-Iinked bond auction amount would increase by R280 million, from R760m to just more than R1bn and that there would be no further switch auctions for the rest of the 2019/20, as the National Treasury was currently reviewing its bond switch auction programme.
Government entities regularly issue bonds and list them on the JSE debt board to raise funds for large capital projects, and investors lend money to these entities by buying the bonds.
Investors buy government bonds in order to earn for regular interest payments and receive the money they have lent back after a predetermined period. More than R1 trillion is currently listed on the JSE's debt board and these instruments account for 90 percent of all liquidity reported to the JSE.