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South African Reserve Bank

General Terms and Conditions of SARB Switch Auctions 

As funding agent of the National Treasury, the Bank conducts switch auctions in government bonds for which the following terms and conditions apply:
  • The switches will be conducted on a cash-neutral basis.
  • Both source and destination bonds will be valued at their all-in (dirty) prices.
  • Tenders should be submitted in terms of yield.
  • Only Primary Dealers in South African Government Bonds are eligible to participate in these auctions on a voluntary basis.
  • The SARB reserves the right to switch nothing or less than the announced amount.
  • There will be no limitation on the number of tenders for each security.
  • Switch auctions will be conducted on a multiple-yield basis, where successful  tenders will be switched at the yield they bid.
  • The bidding format would be as follows:
    • The SARB will announce an indicative yield for the source bond on offer at 10:30.
    • Primary Dealers will then be allowed to tender a quantity for the source bond in minimum amounts of R10 million and multiples of R5 million  thereafter, and at yields for the new destination bond to the nearest 0,005%.
    • These yields will be evaluated by the SARB against its undisclosed fair market value.
  • The Bank will retain the option not to switch any bonds which are perceived to be priced out of line with recent market trends.
  • Settlement will take place on a t + 3 basis. 
On the day of the auction: 
  • At 10:30 the Bank will publish an indicative yield for the source bond involved  in the switch auction.
  • Between 10:30: and 11:00 the Primary Dealers will be allowed to tender to switch  a nominal amount of the source bond into the destination bond by submitting yields for the destination bond.
  • Bids must be submitted using the electronic auction system.
  • By 12:00 the Bank will aim to publish the results of the switch auction. These would include the highest, lowest and average yields of the destination bond which were successful; the nominal amount of the source bond that will be switched; and the nominal amount of the destination bond that will be issued as a result. 
Special Programme of dealing in odd amounts during the Switch Auction.
The conversion of the source bond into the destination bond might translate into odd amounts of the destination bond being created. The Bank is prepared to round off any odd amounts to the nearest R1 000 000,00 (one million rand). In order not to interrupt or delay the tender process, this rounding off process will not be conducted during the
auction, but after the auction results are released. An option will be available for successful Primary Dealers to sell any odd amounts up to R1 000 000 to the Bank.
These odd amounts that have been allocated during the auction process will be bought back at the same price at which they were tendered for. This option will only be available up to 11:00 the next working day following the auction.
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