Term:BOND

A long-term debt security with a stated interest rate and fixed due dates, issued by a corporation or a government, when interest and principal must be paid. The South African government regularly issues bonds to finance its budget deficit. You have four of these bonds in your software – the R186, R207, R208 and R209. Bond prices move inversely with the going level of interest rates. So when interest rates go up then bond prices fall to bring their effective interest rate into like with what is available in the market – and vice versa. South Africa is viewed as an emerging market and so our bonds generally trade on higher effective interest rates than those of first world countries – this is to discount the higher political risk in this country. Consider the chart of R186 over the past five years:

bond

R186 Chart

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