The National Treasury will conduct the switch auction programme to manage the refinancing risk of the government debt portfolio.
The switch programme for 2011/12 is scheduled to start in June 2011 until November 2011.
The inflation linked bond, R189 maturing on 31 March 2013.
There are 11 scheduled auctions for the calendar year as indicated in the calendar.
The switch auctions will be on a cash neutral basis and an All-In-Price pricing method is applicable.
Bids should be submitted on a yield/price basis.
The auctions will be conducted on a multiple yield / price basis (American style where each bid is allocated to the amount), thus submitted bids should be competitive.
The bids submitted will be applicable to the destination bonds.
The switch auctions will be conducted on the dates indicated on the published calendar.
The announcements will be made seven (7) days before the auction day.
An indicative yield / price of the source bond(s) will be published at 09h30 on the day of the auction on Reuters, Bloomberg and the South African Reserve Bank (SARB) website.
Participation in the switch auctions is voluntary through any of the current Primary Dealers in RSA government bonds. Only Primary Dealers are eligible to submit the bids during these auctions.
Participants should submit their offers to switch a nominal amount of the source bond(s), at the indicative yield /price, into the destination bond(s).
Offers to switch out of the source bond(s) should be for a minimum nominal amount of R10 million.
A facility is available to successful participants to top-up any odd-lots of the destination bonds allotted upward to the nearest R1 million.
The top-up amount will be sold to the participants at their respective allotted yield/price.
This facility will be available until 12h00 on the following business day and the SARB dealing desk (+27 12 313 4952) may be contacted in this regard.
Odd-lots will settle on T+2 basis.