Treasury welcomes Citi announcement

Wednesday, April 18, 2012

Pretoria - National Treasury has welcomed investment bank Citigroup's announcement to consider including South African government bonds in its World Government Bond Index (WGBI).

"The National Treasury welcomes the announcement by Citigroup to consider including South African government bonds in its World Government Bond Index. Many global bond funds are benchmarked against the WGBI," said Treasury on Tuesday.

The announcement comes as the South African Government Bond Index's April 2012 profile satisfied all three WGBI index requirements, namely size, credit and a lack of barriers to entry.

If South Africa continued to meet all WGBI criteria with the May and June 2012 profiles, this would make the country the first African Government bond market to be included in the WGBI. This would bring the number of sovereign markets to 23 as of October 2012.

The WGBI was created in 1987 and currently comprises 22 countries including Australia, Canada, Germany and the United States.

Treasury said the country continued to enjoy strong capital flows into the bond market as a result of prudent fiscal and macro-economic policies that have helped to cushion the country against the effects of the global financial crisis.

"Should Citigroup decide to include South African bonds in the WGBI, it would further aid South Africa and its state-owned companies to raise funds for the huge infrastructure programme," noted Treasury.

Last week, Deputy President Kgalema Motlanthe said government was ready to roll out the country's infrastructure plan announced by President Jacob Zuma in his State of the Nation Address earlier this year.

It lists 17 strategic integrated projects that cut across from rail, road, schools and hospitals construction. The projects cover a range of economic and social infrastructure across all nine provinces with emphasis on poorer regions.