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13 October 2008
Standard Bank today launched its third interest bearing, tradable retail deposit note to the retail market. The Standard Bank retail deposit note is a low risk investment product which offers investors a floating interest rate linked to the three month Johannesburg interbank agreed rate (JIBAR) plus a spread of 0,30%.
The first two Standard Bank retail deposit notes, which were launched in February and September 2006, were well received in the market. The third retail note will be issued for a five-year term, with the flexibility to exit at anytime.
Retail deposit notes are a safe and low risk investment with high earnings, making them one of the safest investments in the market today," says Andrew Costa, Head of Debt Capital Markets, Standard Bank Corporate and Investment Banking.
The retail deposit note will, subject to JSE and Bond Exchange of South Africa (BESA) approval, be listed on the JSE and the BESA but only trade on the JSE. This means that the note may be bought and sold like shares through JSE brokers. The retail note will have two offerings. In the primary offering, the minimum deposit any depositor can invest is R10 000 and there is no brokerage payable. Standard Bank may pay commission to the JSE brokers. The secondary offering allows Standard Bank to act as a market maker, ensuring that there will always be a bid price for the notes, thus enabling investors to sell their notes to Standard Bank at any given time.
"The product is basically a deposit with Standard Bank that is tradable," says Costa.
The retail deposit note pays interest quarterly, linked to three-month JIBAR. The rate is reset each quarter and is fixed for the duration of that period. Jibar is the rate at which banks buy and sell short-term money and is traditionally a wholesale and not a retail rate. The retail deposit note therefore offers attractive returns to investors.
The minimum investment in the primary offering is R10 000, but, once listed, can be traded in R100 denominations. There is no maximum investment amount.
"The retail deposit note not only offers investors a safe place to invest their money with good returns, it also offers investors liquidity to withdraw at any time with less risk," says Costa.
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