The National Treasury has previously indicated its intention to split all the three-legged RSA Government Bonds (R150, R153, R194, R157 and R186) and issue only bullet bonds. In general the market participants agreed to the need to split these bonds, but some participants were concerned about the impact on the liquidity in these bonds. The National Treasury decided to offer the split facility to the market on the R150 bond when the first leg was close to its maturity date. A similar split facility is now envisaged for the R194 RSA Government Bond.
The Asset and Liability Management division of the National Treasury will embark on a split programme for the R194 bond as of 1 November 2005.
The R194 bond has three redemption dates, 28 February 2007, 28 February 2008 and 28 February 2009. According to the terms and conditions of the R194 bond, a holder who has invested, e.g. R3 million (nominal) in the R194 bond, will be repaid R1 million on each of the above mentioned redemption dates.
Holders may surrender their holdings (registered in Central Depository) or certificates (registered in own name) for replacement as of 01 November 2005.
If a holding in the R194 bond is not fully devisable by one third, the R007 and R196 legs will be rounded to the nearest one rand and the remaining portion will be added or subtracted from the middle tranche R195.
Holders with electronic holdings at the Central Depository are requested to contact their settlement agents to effect the split on their behalf.
The Asset and Liability Management division would like to stress that the split of the R194 is totally optional. The option to split will be available until the first maturity date (28 February 2007) as per terms and conditions of the R194.
One third of the nominal amount, rounded off to the nearest R1,00 will be redeemed on 28 February 2007, after which the remaining two-thirds balance will be split amongst the R195 and R196.