uh when I say that all the drama uh of course that we've seen some say that it is affecting the corporate bond space in South Africa is this the case right now because we also know that uh the banks are starting to gear up for Basel 3 requirements so that could also change the picture significantly absolutely um I mean there's undoubtedly the local market has seen some volatility um and it's reflected in the the price action we've seen in the Government Bond space um but I think if you look back at where we were in 2006 pre the crisis South Africa was a 40 billion Rand a year issurance Market by last year we saw that increasing to just north of 90 billion as we speak now we are probably at about 90 billion for this year as well so that we've had a significant growth in the in the bond issuance um if you exclude government in our local market um absolutely the going into 2012 and certainly into 2013 as Banks start gearing up for Basel 3 you are going to see a fundamental shift in how corporates are funded um with them increasingly looking towards the Capal Market space um we do have a very deep very liquid market and I think just 2011 so far we've seen close on a dozen um new firsttime issuers into our bond market um which has pretty much doubled the the number of names in our market so um it has been a positive development um so far this year going into next year we do expect that Trend to continue um potentially hitting the 100 billion Rand um issuance Mark um excluding government okay this is quite a big number 100 billion Rand Mark so clearly a posit positive de development as you're alluding to but we also know that a lot of corporates are are much healthier from a balance sheet perspective so have a lot of cash on the balance sheet what kind of appetite is there really on the ground to soak up the the corporate bond issuances given the fact that a lot of investors out there are very wary of those companies that don't have a very strong cash position absolutely and we are starting to see a lot more um uh what's the right word discrimination in terms of where appetite is lying um so from the investor side um 200920 um it was pretty much anybody and anyone any anybody was having a a field day in the bond market and could easily get stuff away we are starting to see certain um elements of fatigue if you want to call it that for want of a better of expression in certain sectors so um your pure corporates uh Industrials um Etc will still find very good appetite they have been fairly under represented in the market if we look at that 90 odd billion number um corporates pure corporates have done probably about 15 billion of that um it has been heavily dominated by your financials your big five um banks in South Africa issuing north of 30 odd billion Rand so far this year um obviously funding some s some asset growth um and obviously preparing for the upcoming Capital regulations um State own entities at about 15 billion um and we are see starting to see differentiation between guaranteed and unguaranteed state own entities your pure guaranteed State own entities still getting their paper away very comfortable your unguaranteed uh State own entities not necessarily getting the volumes they want in their regular auctions um but that is also because they have got very attractive pricing from a spread perspective very very tight um so they're quite comfortable to keep that at this stage so I think going into next year we're going to start seeing investors being far more selective fundamentally South Africa's bond market is under represented by the corporate sector it's a traditionally very government state own entity and financials dominated um and we'd expect Basel 3 to normalize some of that relationship a little bit going forward what about say we're going to see our Market doubling in size okay doubling in size with regards to yield and we spoke this is really got to do with the demand that's really on the ground right now uh does it make sense for corporates to actually get into the bond market and it depends the premium that they'll be paying of course to head into the bond market I mean yeah the from a yield perspective if we look at historically um South Africa's Benchmark rates are at record lows um they haven't been lower um South Africa used to have have a very notoriously inverted yield curve um coming into the crisis for the first time ever um even though credit spreads might have widened slightly and that really hasn't been the case if we look at um corporate spreads for example um relative to government beginning of 2010 we were looking at about 270 on a weighted weighted average basis we are now at about 130 140 so not only have spreads come in but benchmarks have also dropped so it is starting to make it more attractive even if you have slight widening in credit spreads um like we have seen over the last couple of weeks but it's been relatively small like 5 10 basis points at the most um on an oand basis these things are still looking very very attractive what we have seen however is a shift in where appetite LS almost 90% of issuance in the corporate bond market in 2011 has been floating rates very very new for our Market it was traditionally o fixed rate so investors are getting very tight spreads locking in very low base rates now um but even if you look at how this the curve goes up 5year rates Benchmark setting at 7% compared to where we were 3 4 years ago uh well north of 10% um on a relative basis still looks very attractive you also need to Bear into mind that as as Banks start gearing up for Basel 3 there are going to be certain costs that are going to be incurred and those will be passed through um into higher Bank interest rate so on a relative basis that Dynamic won't necessarily play out as badly as as it may seem