Investors willing to acquire Tshwane’s bond notes, says mayor Solly Msimanga
Interested parties have indicated that they are still willing to buy the City of Tshwane’s bond notes if the metro returns to the bond market after having recently botched its first auction in five years.
Tshwane mayor Solly Msimanga said on Friday: "The people who were willing to take that bond are already saying that if you want the money, we are still able to give it to you."
SA’s administrative capital held a successful bond auction in June, which then had to be cancelled because the auditor-general had not issued the required letter of comfort since some of the requirements had not been adhered to.
A letter of comfort provides a level of assurance that an obligation will ultimately be met.
Tshwane’s foray into the market was intended to raise a 10-year bond of R1bn at a pricing 180 basis points above that of the benchmark R186 government bond. The city had received offers amounting to R2.1bn from 11 bidders.
The city wanted to raise the debt to finance capital expenditure for the 2017-18 financial year, but will have to start afresh as the municipality is in a new financial year.
Addressing a media briefing in Johannesburg on Friday, together with DA leader Mmusi Maimane and Johannesburg mayor Herman Mashaba, Msimanga said the willingness of investors to buy the metro’s bond notes showed "the level of confidence" in the city.
He said a report on the process had been tabled in council and the new process was being undertaken at the beginning of the 2018-19 financial year to "ensure we are not caught napping, or with new requirements from the auditor-general to get the letter of comfort".
Tshwane finance MMC Mare-Lise Fourie said that certain processes had to be followed in terms of the Municipal Finance Management Act when planning financing for capital expenditure programmes.
An information statement was published by the city in July, and the National Treasury, the provincial treasury and other interested parties would be able to comment on the information statement and what the City of Tshwane has planned.
The report tabled in council informed it of the publishing of the information statement. Fourie said the city was now awaiting input on the information statement, after which it would go back to council.
When Tshwane’s 2018-2019 budget was adopted, it was agreed that the city would go to the market for R1.5bn to fund capital expenditure projects.
However, the format of the debt has not yet been decided since this would be influenced by the market’s appetite for Tshwane’s debt.