Simon Segal
THE capital market will easily absorb the borrowing=20 requirements set out in Chris Liebenberg’s first Budget=20 — no upward pressure will thus be exerted on interest=20
The market itself responded by pushing the long-dated=20 South African bond, called the R150, down initally by=20 10 points to 16,37percent (by the end of Budget day=20 rates were at their pre-Budget levels).
With budgeted spending at R153,2-billion and expected=20 revenue at R124,2-billion, the shortfall, or net=20 borrowing requirement, comes to R29-billion. To this=20 must be added redemptions of R9-billion, giving a gross=20 borrowing budgeted at R38-billion.
This R38-billion will be financed from government stock=20 in the capital market (R35,5-billion), foreign loans=20 (R1,5-billion) and short-term loans from the money=20 market (R1-billion).
Popular estimates of institutional cash flows this=20 fiscal year are around R60-billion.
Says one broker: “Of this, anything up to half could=20 easily go into bonds given that the alternative equity=20 market is so nervous.”
Last fiscal year’s borrowings from capital were a=20 similar R36-billion (leaving this year’s borrowings=20 some 10percent down in real or inflation-adjusted=20 terms) and were funded comfortably.
This year’s funds will again be raised in the medium- term (bonds maturing in the next four to seven years).=20 A new stock will probably be issued for maturity in=20 2002 and a new foreign issue is also likely.