South Africa borrowed on December 20 a total of ZAR 800mn ( EUR 56.5mn ) through the auction of three inflation-linked Treasury bond issues, in line with its target, data from the central bank showed. The central bank sold ZAR 290mn of the R I2025 issue, ZAR 280mn of the R I2038 issue and ZAR 230mn of the R I2046 issue. Yields edged up. Details are in the table below. Inflation-linked bonds provide investors with a natural hedge against inflation – the CPI index as published by Statistics South Africa, as well as a yield in excess of inflation. The principals of the inflation-indexed bonds are linked to inflation, which serve to minimise inflation risk. This means their principal is increased by the change in inflation over a period. R I2025, due Jan 31, 2025 , 2% coupon R I2025, due Jan 31, 2025 , 2% coupon R I2038, due Jan 31 2038, 2.25% coupon R I2038, due Jan 31 2038, 2.25% coupon R I2046, March 31, 2046 , 2.5% coupon R I2046, March 31, 2046 , 2.5% coupon Auction date 20-Dec-13 13-Dec-13 20-Dec-13 13-Dec-13 20-Dec-13 13-Dec-13 Total amount allocated (ZAR mn) 290 195 280 300 230 305 Total bids received (ZAR mn) 300 1,380 310 360 240 415 Bid-to-cover ratio 1.03 7.08 1.11 1.20 1.04 1.36 Clearing yield 1.85% 1.83% 2.30% 2.29% 2.43% 2.40% Source: South African Reserve Bank
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