Intention to incur long-term debt

The City of Cape Town is planning to incur long-term debt by issuing a municipal bond in order to raise up to R2-billion in additional funds for capital expenditure.

The City proposes to issue municipal bonds by private placement to wholesale investors under its Domestic Medium Term Note programme listed on the Johannesburg Stock Exchange.

In terms of the Section 46 (3) of the Local Government: Municipal Finance Management Act, (No 56 of 2003), the City is setting out the particulars of the proposed debt, and is inviting the public and other interested parties to submit to the municipality comments or representations in respect of the proposed debt.

The proposed long-term debt will be considered for approval by Council at its meeting on 27 January 2010.

The salient features of the debt are as follows:

Issuer of debt: City of Cape Town

Amount of debt: Up to ZAR 2 billion

Purpose of debt: To finance the City’s approved External Finance Fund (EFF) funded capital expenditure

Date of issue of debt: During the period March to May 2010, depending on market conditions
Term of debt: Not exceeding 20 years, depending on investor demand at time of issue

Repayment of debt capital: Repayable up to 2030 depending on exact date of issue and tenor of bond

Effective rate of interest: The rates of the applicable benchmarked RSA Government Bonds ruling at date of debt issue plus a bond spread determined by investor demand at time of issue

Indicative coupon rate: 11.31% – 12.31% (for 15 to 20 years)

Payment of interest: Semi-annually

Debt Security: The debt is unsecured

The City invites written comments or representations from the public, National Treasury and Western Cape Provincial Treasury in respect of the proposed debt. Comments should be directed to:

Director: Treasury
City of Cape Town
PO Box 655
Cape Town
8000

Comments can also be faxed to 086 588 5428; e-mailed to Stewart.Bester@capetown.gov.za, or comments can be transcribed at the 7th Floor, Civic Centre, 12 Hertzog Boulevard, Cape Town.

The closing date for receipt of comments or representations is 31 December 2009.

Any enquiries relating to the above should be directed to Stewart Bester on Tel No (021) 400 5982.