Government debt costs mount as R2 billion payout looms

National Treasury is paying R2 billion in interest on debt due to investors in 2030.

National Treasury is set to pay more than R2 billion in interest to investors that have lent it money on one of South Africa's inflation-linked government bonds.

In a notice posted on the JSE’s Stock Exchange News Service, National Treasury said an interest payment of R2.02 billion would be made on 8 June on the R202 inflation-linked bond.

This interest payment will cover the past six months. While the bond's base interest rate is 3.45% a year, inflation adjustments pushed the effective rate for this period to 10.673%, resulting in a larger payout to investors.

These interest payments typically flow to pension funds, insurers, asset managers and other institutional investors that hold South African government bonds. Individual investors can also own the bonds, although they typically make up a much smaller share of holders.