will continue to strive to maintain cpix inflation within the 3 - to - 6 per cent target range. the credibility of our actions will of course be reflected to some extent in the bond market. 3. domestic bond market developments the south african bond market has for some time had an important role in the financial system, and it is particularly pleasing to note the significant developments in the corporate bond market. it is also of interest to note the burgeoning literature on bond market development internationally. a recurring theme in the literature is the ability of governments or corporates to borrow from non - residents in their own currency. the inability to borrow in ones own currency, referred to in the literature as ‘ original sin ’, often leads to currency mismatch, and ultimately to balance sheet vulnerability in the event of significant exchange rate changes. south africa stands out as one of the few emerging market economies that does not suffer from ‘ original sin ’, given the long history of resident and non - resident participation in the domestic bond market. the development of the corporate bond market adds a further important dimension to the market. it is common knowledge that the south african bond market is highly developed and very deep. there are continuous innovations as is witnessed by the listed products offered by both the bond exchange of south africa and the yield - x of the jse. whereas in its infant stages the bond exchange was dominated by government and parastatals, in the recent past corporate issuances have been increasing. since the south african bond market has historically been a predominantly government and government - related debt market, the use of credit ratings has been limited. with the introduction of corporate bonds in recent years, this has changed as a need has emerged for a better understanding of credit risk. the corporate bond market is today the fastest - growing segment of the bond market, as new issuances of corporate bonds have overtaken those of government bonds. government has also been borrowing less because of fiscal discipline and more efficient tax collection by the south african revenue services. securitisation issuances have also picked up considerably, and while the banks are major issuers in this market, there are other active players as well. the number of issuers accessing the debt capital markets has grown from a single issuer in the period prior to 2000 to 14 issuers in 2005. the secondary market for bonds in general is developing very slowly. contributing to this state of affairs is that buyers tend to buy - and - hold due to the

attractiveness of these instruments in their portfolios. however, there are early signs of a more active secondary market beginning to resurface as turnover has increased in the past year. 4. conclusion the stable inflation environment means that the fixed income structure of bonds has become relatively more attractive to investors with risk profiles that demand a steady real rate of return. also, economic growth has been more robust in recent years amid heightened investor optimism about the country's future prospects. improved economic fundamentals translate into enhanced growth prospects for south african corporates and a concomitant need for long - term debt financing. the development of this sector of the bond market offers borrowers in the private sector access to long - term finance from the capital markets. i am aware that some of south africa ’ s important corporates are here to participate in this conference. we look forward with keen interest to your contributions to the growth of this sector of the market. i wish you well during your deliberations. thank you for your attention.