Sipesihle Mguga and Xolile Bhengu

Sipesihle Mguga and Xolile Bhengu

Johannesburg yesterday became the first city in Africa to raise money through a municipal bond issue when Mayor Amos Masondo opened the public subscription.

The city's Jozibonds require a minimum investment of R1000 and can be bought from post offices or stockbrokers.

The initial offer for the subscription closes on September 7 and listing on the JSE is scheduled for September 21.

The interest that investors will receive is based on the Johannesburg Interbank Agreed Rate (Jibar) and depends on which of the three maturity lengths is selected.

Although Jibar changes daily, the value used for the bonds will be fixed every quarter.

Two-year Jozibonds will increase in value at Jibar plus 0,05 percent; three-year Jozibonds will grow at Jibar plus 0,25percent; and five-year Jozibonds will increase at Jibar plus 0,4percent.

Those who sell their bonds before the maturity date will forfeit 1,5 percent of the value of their investment.

Masondo said Jozibonds are projected to offer a return of more than 9percent a year - a far better deal than bank savings accounts.