Institute for Municipal Finance Officers Conference9 October 2012Prasanna NanaZAR Bond Market Discussion

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OutlineOverview of ZAR DCMKey Considerations for Municipal IssuersEkurhuleni Case Study

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ZAR DCM: R1.5 trillion in Listed Bonds OutstandingIssuer TypeTerm to maturity

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Three Municipalities have Accessed the DCMOver R14 billion of outstanding municipal issuance in the marketSource: JSE*Domestic Medium Term Note Programme

CityDebut yearAmount outstanding (ZARbn)%Size of DMTN* (ZARbn)Johannesburg20047.5 53%13Cape Town20084.2 30%7Ekurhuleni20102.4 17%4

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Municipalities/ Entities rated by MoodysAa3.zaCity of Cape TownEkurhuleniA1.zaA2.zaA3.zaCity of JohannesburgCity of TshwaneNelson Mandela Bay MetropolitanEast Rand Water Care Company (ERWAT)RustenburgAmatholeMbombelaBaa1.zaBaa2.zaBreede ValleyGeorgeKwaDukuzaMatlosanaGreater TzaneenKnysnaMaluti-a-PhofungUmgeniSol PlaatjeSwartlandLephalale

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Pricing: Base RatesForeign inflows into Government bonds at all time highsDriving down long term government bond yields_______________________Source: Bloomberg, October 2012

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Pricing: Credit Spreads_______________________Source: JSE, INET, Absa Capital Research, September 2012Credit spread cycle bottomed-out from the second half of 2011Corporate spreads recover from peak 2009 levels on the back of improved economic prospects and investor demand for creditSOE spreads stabilise at higher levelsSpread blow-out from the credit crisis

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58121.4129.5134.2439322147

57.5121.7129.3133.7640267772

57.3120.9129.3132.6986209459

57.4120.9129.3132.6986209459

60.1120.2129.3125.3849881673

59.6120.1129.3133.0461055132

59.7120118.2132.8367252829

59.7120.2111.8132.8367252829

59.9120.1111.2133.0645309776

60.6119.468.8118.1038944594

60.9119.467116.8476130524

60.4119.367117.2610762022

60.3119.467117.285845884

60.8118.767117.0540952619

60.7118.867117.7732553159

61.5118.867117.4241955579

62.3119.367116.328081893

62.3119.270.1115.9325114733

62.411970.1115.8972001486

63119.570.1115.8972001486

59.1119.869.3113.8769327204

59.3120.367.9110.9256163811

59.3120.467.9113.7478089395

59.412170.2112.3893514461

59.512169.9112.4550832603

59.512169.9112.4550832603

59.5120.869.9114.4869507027

59.5120.569.9114.4869507027

59.2120.469.9114.4869507027

59.2120.469.9114.4869507027

59.5120.569.9113.4831585992

59.8120.569.9110.7840731653

59.7120.570.8110.7840731653

59.8120.470.8110.7840731653

59.8120.470.8110.7840731653

59.7120.771.1103.8991746598

59.5120.570.1105.2264108818

59.6120.669.2103.4865045624

59.6120.569.2103.4865045624

60.1120.769.2108.6718246132

60.2120.669.2108.6718246132

60.1345146796120.637256980766.0533910534111.9173608146

60.0781088208120.660948804971.6901154401111.6766558931

59.7799045287120.594290012371.6901154401111.6766558931

60.0807638042103.572865134471.6901154401109.3259013083

60.1196689269103.325213533570.7882395382106.1076942493

59.8282257471102.826902496170.7882395382106.1076942493

59.7832134876102.496700361569.9765512266106.1076942493

59.6628636052103.293108623169.705988456110.7518823478

59.6160161644103.145474226869.4354256854110.7518823478

60.2547787675103.145474226869.1648629149110.7518823478

60.4239113073103.169608609769.1648629149110.7518823478

60.1641694902103.845472163469.1648629149113.2450587547

59.6008217892103.194551583769.1648629149113.4476610688

60.3789547883102.858697012369.1648629149113.4476610688

59.5044445986101.865506667369.1648629149112.9073882311

59.5782594073103.480880252569.7420634921112.9073882311

59.1955268471101.689380470469.7420634921112.9073882311

59.0690788281101.689380470469.7420634921112.9073882311

112.682274548688.796374367658.531122816101.5917928048

112.682274548688.796374367658.531122816100.9472987324

115.810744528288.990303541358.6666847837101.3075447932

115.810744528288.884907251358.5941668055101.3075447932

115.810744528290.676644182158.5125785643101.3326755646

115.810744528290.676644182158.5125785643101.3326755646

AAA-rated SOE Spreads

AA-rated SOE spreads

AA-Rated Corporate Spreads

A-Rated Corporate Spreads

bps

Sheet1

DateAAA-rated SOE SpreadsAA-rated SOE spreadsAA-Rated Corporate SpreadsA-Rated Corporate Spreads

2-Jan-0529.6700744447.5488616380.75839039159.7

9-Jan-0528.7551025947.8950874680.06160722159.7

16-Jan-0528.2387342347.7656122578.53849726159.7

23-Jan-0528.1356192747.0838964677.89687608154.1

30-Jan-0528.3652662747.2318955176.73266751148.4

6-Feb-0528.4189538547.8166066576.73266751148.4

13-Feb-0528.1307365148.9583271876.73266751148.4

20-Feb-0528.6860794649.6771387376.73266751148.4

27-Feb-0529.4745962449.2118859175.40718266148.4

6-Mar-0528.6288513548.3637670575.33416559148.4

13-Mar-0529.6278835947.187227474.16589245148.4

20-Mar-0529.6663804748.476180275.40121336148.4

27-Mar-0530.0323724848.5647255275.13478708148.4

3-Apr-0529.5416115648.1494367675.3494162148.4

10-Apr-0530.2564653847.6647016474.64829439145.6

17-Apr-0531.3719247345.0731127774.75560895147.5

24-Apr-0530.1247387346.8168943174.77707186147.5

1-May-0529.7155445350.4303574.15121333147.5

8-May-0529.3557134949.8249246373.06690701146.9

15-May-0529.2780237949.9315789373.06690701146.9

22-May-0528.3014091550.3281474572.98820966145.6

29-May-0527.1181523850.2001622973.0525984148.3

5-Jun-0525.8694277950.1875491673.15361719144.2

12-Jun-0525.7037813750.5390446572.8030563140.8

19-Jun-0525.7408251451.4382332473.17508009140.8

26-Jun-0526.4112308550.9500347673.12414143140.8

3-Jul-0525.5769004550.4070948272.49971379140.8

10-Jul-0525.7763571350.3746579172.67857138139.0

17-Jul-0526.2572247851.0091815269.61223667139.0

24-Jul-0525.9405648151.6327845868.61778842139.0

31-Jul-0525.2234804551.3293299267.8379693138.6

7-Aug-0525.7560787351.0008578667.70919182138.6

14-Aug-0526.4298503651.5389288167.62334017138.6

21-Aug-0526.7608701851.7396242967.71634613137.1

28-Aug-0526.0522521751.2442151567.89520373137.1

4-Sep-0526.6887879451.2283097567.53033422137.1

11-Sep-0526.0249639451.1911661467.36578523130.8

18-Sep-0526.6492534151.4471365570.90386193130.8

25-Sep-0526.3145892751.7157198270.80756982134.6

2-Oct-0526.9084237251.5864362770.62705421139.1

9-Oct-0526.2508681151.9975609769.68339151140.2

16-Oct-0526.0367776851.6683651268.93714049140.2

23-Oct-0526.0199084552.6093697168.90093466140.2

30-Oct-0526.1171020852.8850277768.67986827140.2

6-Nov-0525.9046500451.8035498668.43511925140.2

13-Nov-0526.098627451.7745471167.76072444140.2

20-Nov-0526.5088495851.9693792368.8289473596.2

27-Nov-0526.6115786552.5125813568.947368499.3

4-Dec-0526.4548460553.2169523668.8157894699.3

11-Dec-0525.9801314651.653320467.09210522101.0

18-Dec-0525.4201072651.8492150267.61842103101.5

25-Dec-0526.3866789152.420284967.69736839101.5

1-Jan-0625.9287724752.5667229667.85526314101.5

8-Jan-0626.2016055852.4581501567.55263155100.9

15-Jan-0625.7595502252.3824196567.53947366100.9

22-Jan-0625.3890204252.1668195567.82894735100.9

29-Jan-0625.465944652.3576913167.68421051100.9

5-Feb-0625.5198995852.6950010666.64999998100.3

12-Feb-0625.7017753453.1559525166.39473681100.3

19-Feb-0624.5672447853.359961366.0394736599.6

26-Feb-0624.3618396252.9353294865.91578946101.9

5-Mar-0623.9938612452.4985267765.92582415116.0

12-Mar-0622.8124286752.2020767364.56043952113.6

19-Mar-0623.288286252.725042163.90109889112.5

26-Mar-0623.2985452351.8656362662.17032965112.5

2-Apr-0622.966191551.2748126961.56593405112.2

9-Apr-0622.8886711450.3776864561.59340658112.2

16-Apr-0622.806778350.3957255761.12637361112.2

23-Apr-0622.838926550.4899058160.09615382112.2

30-Apr-0622.5652013149.9064960160.89843749110.6

7-May-0623.16437248.8170007261.30208332110.6

14-May-0622.6375734349.0013040360.53385416109.8

21-May-0622.0967194848.7039845361.02864583109.8

28-May-0622.807056348.7287128661.76886792109.8

4-Jun-0622.5622645145.7617000661.79245282109.8

11-Jun-0622.1497663350.8210178361.72169811109.8

18-Jun-0622.5913547350.5810678261.41509433109.8

25-Jun-0622.5929655251.4588644265.05009005109.8

2-Jul-0623.4364597351.9820615965.56864862120.1

9-Jul-0623.9401936952.3347891365.03729725120.3

16-Jul-0624.1910801452.1661466568.60054051131.3

23-Jul-0624.0413757151.0252733268.15499998131.3

30-Jul-0624.2005603352.9432655369.88572069131.2

6-Aug-0624.1787968154.454214170.0865315130.0

13-Aug-0623.9770983654.6298279270.25049546127.5

20-Aug-0623.6545687854.9948012273.57540926126.8

27-Aug-0623.5149406854.3889751673.68352073126.5

3-Sep-0623.8221080556.297120873.73821727126.5

10-Sep-0624.7341603157.5967704573.61373405124.4

17-Sep-0624.9649493258.1447602271.47064658124.4

24-Sep-0625.0254645658.796725371.47957663123.9

1-Oct-0624.0657615358.7919361671.81337851123.6

8-Oct-0624.441498459.5600683371.15879774122.3

15-Oct-0623.9362097958.1728590374.0678849122.2

22-Oct-0624.1431909957.365707971.41462708121.2

29-Oct-0623.5179216859.0290452871.64474119120.9

5-Nov-0624.2551751957.9320062771.89259136120.7

12-Nov-0623.7492903957.6699488572.91681824121.1

19-Nov-0622.9650361356.9118893572.87601289121.1

26-Nov-0622.9124085757.2100132773.21791797121.1

3-Dec-0622.4360657457.2078941673.81740116121.1

10-Dec-0622.6437340156.5548695673.7610985121.1

17-Dec-0622.6279947856.7888140774.1889987120.8

24-Dec-0622.6405864356.7628202374.10827122121.2

31-Dec-0623.0039852256.9718304974.24833927121.2

7-Jan-0722.6371817456.8203739974.58380589121.3

14-Jan-0723.638963755.906351575.22561567121.4

21-Jan-0723.3596166154.9864803775.24963543121.5

28-Jan-0723.0184001752.6714462775.22411696121.5

4-Feb-0723.2052473852.5117537375.82473265121.2

11-Feb-0723.2760599851.4964257576.41570803119.9

18-Feb-0723.6576571149.901788479.06829227120.0

25-Feb-0723.5497802550.7143926779.99517983120.4

4-Mar-0723.4420490251.3088180881.53754859121.9

11-Mar-0722.6385077552.4629304381.67846725120.8

18-Mar-0723.051349154.6854357483.8125405120.7

25-Mar-0722.9130234654.2464899184.31788723121.1

1-Apr-0722.9935327754.9110528787.13238887121.5

8-Apr-0723.4467178149.0573447986.70956163120.6

15-Apr-0723.0839901448.9119723286.82033755120.7

22-Apr-0722.967011848.7329188886.68565754120.3

29-Apr-0723.5210193149.0230923286.77088742120.4

6-May-0724.0307498748.7351548986.56010385119.9

13-May-0724.455892749.1127543787.8912164120.8

20-May-0723.4025120848.8423743788.73378357121.7

27-May-0723.3103748948.8563219988.80742558123.4

3-Jun-0722.7303731249.6937129488.34989885123.6

10-Jun-0723.7810419550.6801062488.31677981122.4

17-Jun-0723.8519222948.821999488.24617162122.4

24-Jun-0723.8422977547.5157224189.25642876123.2

1-Jul-0723.7701136647.3127744989.61821003123.0

8-Jul-0724.3845867447.3414017889.48865932122.7

15-Jul-0724.4872543647.7642735189.69521089123.9

22-Jul-0724.1426893647.6476085489.78774195123.8

29-Jul-0723.992810147.78038789.95032092123.2

5-Aug-0724.4740373550.4160432990.70411087123.8

12-Aug-0725.5636748850.4005514292.89284779124.7

19-Aug-0726.4254133852.523075992.96829926125.3

26-Aug-0728.6812775850.1886585392.9276016124.9

2-Sep-0727.7899243949.8979608690.21738982123.5

9-Sep-0726.6481164750.5125757695.89370563123.6

16-Sep-0729.0228580450.4880666297.48527156122.4

23-Sep-0728.9618745350.6624852297.43358336122.1

30-Sep-0729.9975958950.565586100.1204321122.5

7-Oct-0731.9774610950.3017778100.1886202122.3

14-Oct-0732.9520144550.90413287100.2047033121.3

21-Oct-0730.5995612552.15392226100.2657009121.3

28-Oct-0727.4475837755.22924034100.260282119.4

4-Nov-0726.4166746756.1328361100.3109976120.8

11-Nov-0725.8764730158.6654448104.6739613121.0

18-Nov-0726.4011817670.78892291104.6014658122.1

25-Nov-0726.1098708472.6594923105.0303355125.7

2-Dec-0724.9687125673.17565752105.4764554125.9

9-Dec-0731.086506672.53563712105.4893358127.0

16-Dec-0729.9842555672.01624056104.6794443124.0

23-Dec-0728.0138705471.64530279104.7388332123.9

30-Dec-0728.81357471.54344768104.7887325123.6

6-Jan-0829.7481654571.38941349104.6664027123.3

13-Jan-0829.4635409772.20070487104.4491722122.3

20-Jan-0829.9011316575.37307243104.3411184123.2

27-Jan-0829.9630032477.59795396104.2755433123.7

3-Feb-0828.6566744577.07457264104.5113861125.0

10-Feb-0836.6659332476.63344882104.5109615125.6

17-Feb-0837.6542528676.13928372104.5746545125.6

24-Feb-0838.3342887875.86538749110.5377968130.0

2-Mar-0838.8795426977.22427873110.2212573133.6

9-Mar-0840.4148243477.83015217111.0955831141.1

16-Mar-0840.3426610979.00683106117.6810557142.1

23-Mar-0840.0540080680.29891839119.2579672141.7

30-Mar-0840.1983345881.32211556121.646913144.7

6-Apr-0841.6545098581.95616719124.4226695145.0

13-Apr-0842.0589848883.00209279125.3622782148.2

20-Apr-0841.562862582.92063044125.1469455150.0

27-Apr-0841.562862583.32516276125.167179149.8

4-May-0841.8996243587.96864629134.7126379151.2

11-May-0842.0901914288.91223232134.8154915151.2

18-May-0842.6537864390.40740374134.8156109150.6

25-May-0842.8984198591.01773691137.5031557161.6

1-Jun-0843.3390139192.40506187137.6057258161.3

8-Jun-0843.78197697.81829395137.5836279160.5

15-Jun-0843.9984657897.81490876137.6473962159.4

22-Jun-0843.9761242798.02434073137.6171478166.4

29-Jun-0846.20351785100.9404262136.3513727167.2

6-Jul-0846.67176558103.3435425152.1220941170.7

13-Jul-0848.24728371104.8900347149.5281257171.7

20-Jul-0848.14986331121.2447769149.1585571171.7

27-Jul-0847.21186128124.5710453148.5901708171.7

3-Aug-0849.040663130.6627208161.9895329187.0

10-Aug-0849.13279142132.4941585164.5242314187.3

17-Aug-0849.20904392151.152201168.1423455191.3

24-Aug-0849.54935119149.8013685165.4256788192.6

31-Aug-0850.56599216146.9869266163.853719192.6

7-Sep-0850.39254097146.4692063164.5014622193.1

14-Sep-0850.14198137146.2847512163.1186585197.7

21-Sep-0849.5837245147.1907464161.9130072199.0

28-Sep-0849.96917055146.9810118162.7327028199.7

5-Oct-0850.52433995147.0827453164.3334528199.7

12-Oct-0850.77378422144.8744204167.7280325199.7

19-Oct-0854.81575051143.7547671168.1622227199.7

26-Oct-0855.07351716144.8742189168.11011228.6

2-Nov-0855.04479112143.395263168.1858114228.6

9-Nov-0856.39148486148.0784964172.9815187228.6

16-Nov-0857.43938503151.821372172.9859248228.6

23-Nov-0860.68040879152.2050856172.6436617230.5

30-Nov-0864.17441277151.664627172.9453754234.6

7-Dec-0864.50667778151.1560588172.7752142234.6

14-Dec-0864.50667778153.9554731172.7579216234.6

21-Dec-0864.50667778153.938232171.326187225.1

28-Dec-0864.36672761154.0071962171.3739523225.1

4-Jan-0964.4367027153.938232171.3382833225.1

11-Jan-0964.22677745153.5416877171.4905997225.1

18-Jan-0964.26771288153.5490901171.953489225.1

25-Jan-0964.5720216156.3728753171.3185697225.1

1-Feb-0964.1521711156.0625363169.4339496225.1

8-Feb-0979.94034464157.9530554172.6970787233.9

15-Feb-0972.66879514155.5587975172.7594311233.9

22-Feb-0974.62824971153.541519182.4674744233.9

1-Mar-0975.23347323155.9180111182.3297645233.9

8-Mar-0976.08885939155.8458821182.1581569240.3

15-Mar-0975.44208995159.1675878185.9372174251.2

22-Mar-0976.79683514160.3934748207.7362022257.2

29-Mar-0977.05940391160.8091282237.5205683258.8

5-Apr-0976.88371205160.7763237242.6626991258.8

12-Apr-0977.15417502160.598966242.6771433258.8

19-Apr-0976.99574218161.9361027242.5173329258.5

26-Apr-0975.820544162.1857016242.4017793261.8

3-May-0975.820544162.1857016242.4740003259.6

10-May-0976.20834997161.4009628242.4162235260.3

17-May-0975.1960117160.0426457248.6994452258.6

24-May-0976.28550291159.3676947247.3416915258.6

31-May-0976.42966652160.675771250.0283104258.6

7-Jun-0976.55272365159.6804421250.1294197259.2

14-Jun-0976.72688173161.3469245247.3850241258.7

21-Jun-0976.64747296163.1468668247.3994683259.2

28-Jun-0976.24729909161.2929656245.9261611255.1

5-Jul-0976.86178453160.503011245.1750634254.7

12-Jul-0976.62355822160.0168441243.849087253.4

19-Jul-0976.76914096159.4291063243.6191355252.8

26-Jul-0976.81880202159.2379036243.3302517250.5

2-Aug-0976.72100578158.8321522242.7813725248.4

9-Aug-0976.4536647158.1916565242.8535935247.3

16-Aug-0976.72691582158.8284692239.8775131237.7

23-Aug-0976.85696857159.1551667230.0121331231.3

30-Aug-0976.47686756158.7955926230.0121331231.3

6-Sep-0976.7415576158.2735469230.5454123230.9

13-Sep-0975.04235042156.5883924222.8986595229.0

20-Sep-0974.48517319155.3394571222.3931128223.6

27-Sep-0973.88011552154.880459222.5231105222.8

4-Oct-0973.81926404153.9983679219.8942685222.8

11-Oct-0973.54246373153.557078219.9809336222.8

18-Oct-0973.62641258153.5382266219.547608222.8

25-Oct-0973.80883015152.8911154219.5620522222.8

1-Nov-0974.51248576152.1923198248.2094058210.1

8-Nov-0974.39330618151.7091901248.2094058208.6

15-Nov-0973.24381135151.6883138248.2094058208.7

22-Nov-0973.45674284151.2179176247.4149984206.9

29-Nov-0973.19934782150.9772211247.4149984206.9

6-Dec-0973.04313901150.5818816243.1251986207.1

13-Dec-0971.27937523150.5758509243.1251986208.1

20-Dec-0971.11869402150.3884971243.1251986208.1

27-Dec-0971.18400625150.3523128243.1251986208.2

3-Jan-1071.19272679150.2010647241.5363835207.6

10-Jan-1070.85226352150.4154672241.5363838206.5

17-Jan-1070.46130667149.8713954241.5363838204.7

24-Jan-1070.42936761147.7731889238.3587543201.5

31-Jan-1070.05908565144.7931397236.1344136200.8

7-Feb-1069.29081658139.9828464233.9100725200.7

14-Feb-1068.21898946136.4050398231.6857323195.4

21-Feb-1068.22710267133.9879941228.8258658191.6

28-Feb-1067.98674475132.0177748226.5220844195.7

7-Mar-1068.11850101125.0212481226.5220844177.1

14-Mar-1066.93070982123.9708482226.1248807177.1

21-Mar-1066.36450077129.2520588221.9192879176.4

28-Mar-1067.00329361129.2520588221.9192879176.3

4-Apr-1066.57209398129.0650892220.9977753173.6

11-Apr-1066.86437714128.7089761220.9977753173.5

14-Apr-1065.82156134124.280744220.6005715172.8

18-Apr-1067.99711971128.8608295201.4378772170.9

25-Apr-1067.03894248128.8332371200.6434699170.2

2-May-1066.63509485130.3737258198.7766126168.3

9-May-1065.77066243130.0698494198.7766126168.3

16-May-1065.69433077128.7651192.6278996174.4

23-May-1065.06045267128.0986397192.6278996174.0

30-May-1065.18934567128.1016032192.6278996173.2

6-Jun-1065.13034745127.9180304192.6278996167.9

13-Jun-1065.11663652127.3086173191.3114531167.9

20-Jun-1066.30027926127.3086173191.3114531167.8

27-Jun-1065.87563471126.8490303180.9675046167.9

4-Jul-1065.36802142128.4932255178.2156774167.9

11-Jul-1064.8147.6191.8168.0

18-Jul-1064.4145.2186.6

25-Jul-1064.5144.3180.1

1-Aug-1065.2146.3180.0

8-Aug-1064.2143.5180.0

15-Aug-1064.1143.4179.2

22-Aug-1064144.5180.5177.8

29-Aug-1064144.4170.7171.5

5-Sep-1062.4143.9169.3166.9

12-Sep-1062.3143.7169.3167.5

19-Sep-1062.3143.8166.7167.6

26-Sep-1062.2143.8166.2166.0

3-Oct-1062.1144.4166.2161.4

10-Oct-1061.5143.9166159.6

17-Oct-1061.5144166159.5

24-Oct-1061.7144166156.4

31-Oct-1061.7143.5166162.7

7-Nov-1065.1142.9166162.7

14-Nov-1064.7142161161.9

21-Nov-1064.6142161161.7

28-Nov-1064.1142161168.1

5-Dec-1064141.7161162.3

12-Dec-1063.9141.9161160.8

19-Dec-1063.6141.9161160.9

26-Dec-1063.6141.9161160.9

2-Jan-1163.6141.8161160.8

9-Jan-1163.3141.8161160.8

16-Jan-1163.4141.3161160.9

23-Jan-1163.2141.9161160.5

30-Jan-1163141.9161160.6

6-Feb-1162.9141.8161160.1

13-Feb-1163128157.4157.2

20-Feb-1163.1127.7157.4156.3

27-Feb-1164.5127.7157.4156.5

6-Mar-1164.3123.5156.3156.6

13-Mar-1165.3125.2156.3145.2

20-Mar-1165.1125.2156.3145.2

27-Mar-1165.1127.6156.3145.2

3-Apr-1165.4125.5156.3139.4

10-Apr-1164.7124.4156.3139.3

17-Apr-1164.6124.3156.3136.9

24-Apr-1164.4124.1156.3135.8

1-May-1164.4125.1156.3135.8

8-May-1164.3124.6156.3135.8

15-May-1163.9124.6156.3135.8

22-May-1163.8124.5156.3135.6

29-May-1163.4121.8155.9138.7

5-Jun-1158.4122.6128.8131.7

12-Jun-1157.5122.6128.8131.7

19-Jun-1157.4122.5128.8133.1

26-Jun-1157.2122.2129.5132.8

3-Jul-1158121.4129.5134.2

10-Jul-1157.5121.7129.3133.8

17-Jul-1157.3120.9129.3132.7

24-Jul-1157.4120.9129.3132.7

31-Jul-1160.1120.2129.3125.4

7-Aug-1159.6120.1129.3133.0

14-Aug-1159.7120118.2132.8

21-Aug-1159.7120.2111.8132.8

28-Aug-1159.9120.1111.2133.1

4-Sep-1160.6119.468.8118.1

11-Sep-1160.9119.467116.8

18-Sep-1160.4119.367117.3

25-Sep-1160.3119.467117.3

2-Oct-1160.8118.767117.1

9-Oct-1160.7118.867117.8

16-Oct-1161.5118.867117.4

23-Oct-1162.3119.367116.3

30-Oct-1162.3119.270.1115.9

6-Nov-1162.411970.1115.9

13-Nov-1163119.570.1115.9

20-Nov-1159.1119.869.3113.9

27-Nov-1159.3120.367.9110.9

4-Dec-1159.3120.467.9113.7

11-Dec-1159.412170.2112.4

18-Dec-1159.512169.9112.5

25-Dec-1159.512169.9112.5

1-Jan-1259.5120.869.9114.5

8-Jan-1259.5120.569.9114.5

15-Jan-1259.2120.469.9114.5

22-Jan-1259.2120.469.9114.5

29-Jan-1259.5120.569.9113.5

5-Feb-1259.8120.569.9110.8

12-Feb-1259.7120.570.8110.8

19-Feb-1259.8120.470.8110.8

26-Feb-1259.8120.470.8110.8

4-Mar-1259.7120.771.1103.9

11-Mar-1259.5120.570.1105.2

18-Mar-1259.6120.669.2103.5

25-Mar-1259.6120.569.2103.5

1-Apr-1260.1120.769.2108.7

8-Apr-1260.2120.669.2108.7

15-Apr-1260.1120.666.1111.9

22-Apr-1260.1120.771.7111.7

29-Apr-1259.8120.671.7111.7

6-May-1260.1103.671.7109.3

13-May-1260.1103.370.8106.1

20-May-1259.8102.870.8106.1

27-May-1259.8102.570.0106.1

3-Jun-1259.7103.369.7110.8

10-Jun-1259.6103.169.4110.8

17-Jun-1260.3103.169.2110.8

24-Jun-1260.4103.269.2110.8

1-Jul-1260.2103.869.2113.2

8-Jul-1259.6103.269.2113.4

15-Jul-1260.4102.969.2113.4

22-Jul-1259.5101.969.2112.9

29-Jul-1259.6103.569.7112.9

5-Aug-1259.2101.769.7112.9

12-Aug-1259.1101.769.7112.9

19-Aug-12112.788.858.5101.6

26-Aug-12112.788.858.5100.9

2-Sep-12115.889.058.7101.3

9-Sep-12115.888.958.6101.3

16-Sep-12115.890.758.5101.3

23-Sep-12115.890.758.5101.3

kwatshal:All SANRAL bond spreads removed as Moody's downgraded SANRAL to A2.za on 4 May 2012

kwatshal:GFC2 matured, and SMF1 tightened 80bp

kwatshal:AA05 included

kwatshal:TL12 matured

kwatshal:IC02 matured

kwatshal:widening due to removal of TL12 and IC02 from the weights

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Fixed Rate vs. Floating Rate

Fixed Rate IssuanceMargin(Credit Spread) over Government bondsCoupon payable every six months for duration of bondFloating Rate IssuanceMargin over 3 month Jibar rate Coupon payable every 3 months for duration of bond

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OutlineOverview of ZAR DCMKey Considerations for Municipal IssuersEkurhuleni Case Study

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Factors for ConsiderationCredit ratingProductsIssuerCommercial paperSecured /Unsecured bondsFixed / Floating rate bondsInflation-Linked bondsMFMAJSE Listing RequirementsCommercial Paper RegulationsAsset Managers, Pension Funds, Insurance ComapniesMandate requirementsCredit AppetitePortfolio LiquidityPeer pricingCompeting issuanceTiming InvestorsMarket conditionsLegislationInvestment / Sub-investment grade Moodys, S&P, Fitch, GCRDocumentationBasel IIIImpact on bank funding costsDMTN programmeListed on JSE

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DCM Checklist: Key Prerequisites

Financial ManagementGovernance FrameworkRisk ManagementUnqualified/Clean AuditsTransparencyGood Credit Rating (single A and above): preferably from an international rating agency: Moodys, Fitch Ratings, S&P

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Bonds generally have a bullet profilePay interest/ coupons during the duration of the bondPay principal at maturityBullet Profile needs to be carefully managed to avoid liquidity squeeze at maturity due to a single big principal paymentSinking fund: set aside periodic payments for future retirement of principalShould be externally managed Preferably guaranteed growth contract from a party with a strong credit profile

Sinking Fund

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Commercial Paper: Short Term Funding Needs

RequirementCommercial PaperTenors1 month to 12 monthsInvestorsMoney market funds, bank conduitsRequired ratingShort term rating of P1/P2 (equivalent of A- long term and above)Rating requirementsCommitted Bank linesMFMA requirementsBridge shortfalls within financial year in expectations of anticipated incomeRepaid via funds from enforceable allocations or long term debtDebt must be paid off within financial yearDebt cannot be refinanced with other short term debt

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Role of an Arranger: Strategic Advisor

DocumentationInvestor MarketingAuctionStrategic AdviceClosingAssist with appointing all third partiesRelevant DisclosureTerms and Conditions of bondsPreparation and listing of DMTN programmeMarketing MaterialsInvestor RoadshowInvestor preferencesPrice guidanceVolumeAuction/ BookbuildSettlementOptimal volume, pricing and tenorTiming to marketAuction StrategyInvestor negotiations on DMTN terms and conditionsSettlementJSE listing

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Timing: 8 to 10 weeksInternal Approvals

Week 1Week 1Week 2-6Week 4 to 7Week 9Week 10City ManagerCouncilInformationStatementArrangerDebt SponsorLegal CounselAgents: Settlement, Transfer etc)JSE SubmissionsAncillary documentationDMTN listingRoadshow2-3 days: Cape Town2-3 days: Johannesburg & PretoriaPresent credit storyOpportunity for investors to meet management and establish a relationshipDutch Auction9am 11amT+5: Flow of fundsDisclosure Statement

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Roadshow: Presentation to Potential Investors

4 to 6 day one-on-one meetingsRoadshow team: City Manager, Chief Financial Officer, Head of Departments (up to 4 attendees) & Lead ArrangerKey Objectives:Gives investors an opportunity to meet the leadership team responsible for strategic decisionsDevelop and maintain ongoing investor relationships similar to bank relationshipsKeep investors appraised on credit story Determine investor appetite and preferencesExplore potential for lead orders (private placement)1 - 2 roadshows per annum recommendedDeal Specific roadshow: discuss upcoming bond issue and garner interestNon-deal specific roadshow: update investors on strategy, financials etc

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Investor BaseCape Town, Johannesburg & PretoriaCape TownJohannesburgPretoria

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OutlineOverview of ZAR DCMKey Considerations for Municipal IssuersEkurhuleni Case Study

*Strictly Private and Confidential

Ekurhuleni Metropolitan Municipality (Ekurhuleni) Inaugural bond debt issuance July 2010Ekurhuleni Metropolitan Municipality (Ekurhuleni) R815 mn 10-yearInaugural bond debt issuance July 2010Case Study

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Expand and Diversify Funding SourcesKey reasons to access DCMGood Timing

Expand funding base (current investor base of 20 investors across 3 bonds)Less restrictive covenants, terms and conditions: no financial covenantsSingle documentation and terms platform for all lendersImprove City profile

Historically low base ratesScarcity valueInvestor demand for term issuance

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Key Highlights

DocumentationZAR4bn Domestic Medium Term Note Programme (DMTN)ApprovalsMunicipal approvals (Disclosure statements etc.)Johannesburg Stock ExchangeMoodys rating agency notificationMarketingRoadshow marketing presentationInvestor roadshow (1 day in Johannesburg and 2 days in Cape Town)Investor credit review processIssuanceTermsheetAuctionSettlement

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Ekurhuleni Inaugural Bond Auction Salient Features

JSE Instrument CodeEMM01Programme RatingMoodys : National Long-term Aa2.zaIssuance Listing & SettlementListedOffered SecuritiesSenior Unsecured notesTerm10 year FixedSettlement/Issue Date28 July 2010Targeted Issue SizeZAR 815mnIssued AmountZAR 815mnTotal Bids ReceivedZAR 1,516mn (Investor diversity with 1.86x oversubscribed)Pricing BenchmarkR208Issue margin+185bps

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Broader Funding BaseInvestor participationBookbuild progression

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DisclaimerThis presentation has been prepared by Barclays Capital - the investment banking division of Barclays Bank PLC and its affiliates worldwide (Barclays Capital). This publication is provided to you for information purposes, any pricing in this report is indicative and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has been obtained from sources believed to be reliable but Barclays Capital does not represent or warrant that it is accurate and complete. The views reflected herein are those of Barclays Capital and are subject to change without notice. Barclays Capital and its respective officers, directors, partners and employees, including persons involved in the preparation or issuance of this document, may from time to time act as manager, co-manager or underwriter of a public offering or otherwise deal in, hold or act as market-makers or advisors, brokers or commercial and/or investment bankers in relation to the securities or related derivatives which are the subject of this report.Neither Barclays Capital, nor any officer or employee thereof accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents. Any securities recommendations made herein may not be suitable for all investors. Past performance is no guarantee of future returns. Any modeling or backtesting data contained in this document is not intended to be a statement as to future performance.Investors should seek their own advice as to the suitability of any investments described herein for their own financial or tax circumstances.This communication is being made available in the UK and Europe to persons who are investment professionals as that term is defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2001. It is directed at persons who have professional experience in matters relating to investments. The investments to which is relates are available only to such persons and will be entered into only with such persons.Barclays Capital - the investment banking division of Barclays Bank PLC, authorised and regulated by the Financial Services Authority (FSA) and member of the London Stock Exchange.Copyright in this report is owned by Barclays Capital ( Barclays Bank PLC, 2005) - no part of this report may be reproduced in any manner without the prior written permission of Barclays Capital. Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place, London, E14 5HP.EUxxx

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