Central Bank of Swaziland

What Are Government Treasury Bonds?

These are long-term debt instruments with tenures of 3, 5, 7 and 10-years, considered to have the relatively lower risk within the domestic market and are issued by the Central Bank of Swaziland on behalf of the Government of Swaziland. Bonds are issued at either a discount, par or premium to their face value meaning that an investor may pay less, equal or more than the par or face value and at maturity receives the par-amount if the bond is held to maturity. These instruments can be sold before their maturity date on the secondary market and the sale can result in either a capital gain or loss depending on where the yields are at the point of sale. If the market yield is the same as the purchase yield there is no loss or gain, if the market yield is below the purchase yield there is a capital gain and the opposite is true for a market yield above the purchase yield. With the existing government bonds the coupon or interest is paid semi-annually irrespective of whether it is a fixed or floating coupon rate.

Why Issue Treasury Bonds?

The Government issues bonds to raise money needed to meet longer term budgetary needs and also in order to develop the domestic capital market as they provide additional investment avenues for both institutional and individual investors as well. These securities are also used as a reference for pricing or benchmarking by institutions who want to raise funds in the market for capital expansion.


The Auction and the Auction Process

Treasury Bonds auctions are announced in at the beginning of the financial period and bidding is open until at least 21 days before closing date. Bids may only be submitted directly through Primary Dealers.

Treasury securities auctions are open to all bidders, including commercial banks, non- banking financial institutions, and stockbrokers, corporate and individual investors. Authorized Primary Dealers may also submit bids on behalf of their customers. These Primary Dealers may bid competitively for their own account and clients and may also submit non-competitive bids on behalf of their clients. Individuals bidding non-competitively have the option to submit their bids direct to the Bank, without going through a Primary Dealer.

Auction Results

The announcement auction results are announced publicly on the Bank’s website and through electronic media.

Successful bidders are notified by phone, fax or email normally by 15:00 hrs on the day of the auction. The auction results include:

  • The total amount of bids received;
  • The total amount of accepted bids; and
  • The lowest and average discount rate of accepted bids.