Spot Bonds

A bond is a long-term loan where the borrower pays the bond holder interest over a period of time and repays the full loan amount on a predetermined maturity date. Spot deals are transacted on the standard t+3 settlement date while forward deals have a settlement date after t+3

Benefits

• Liquid spot market
• Dependable income provides the investor with a regular and steady income while preserving the initial investment amount (principal)
• Security bond holders usually have priority over stockholders when a company is liquidated and more likely to receive payment
• Portfolio risk diversification
• Safe investment - bonds are evaluated and rated based on credit history and ability to pay interest/repay obligations on time
• Settlement is electronic with t+3 settlement and less of spot trades is achieved

Who should use this product?

• Investors looking for a long-term stable investment
• Investors looking to enhance the long-term performance of a portfolio of assets
• Investors looking to diversify risk in their portfolio

How to use this product

• If trading through the Central Order Book, trades are margined and guaranteed by SAFCOM, eliminating counterparty credit risk
• If trading bonds as Report Only trades counterparties pick up the risk and credit lines of each other
• Various types of bonds available - Fixed Rate Notes (Vanilla Bonds), Floating (Variable) Rate Notes, Zero Coupon Bonds and Commercial Paper.
• As portfolio risk diversification

Full contact details for the JSE Interest Rate Division are outlined below:

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