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Tuesday, August 1, 2000
Participation bonds

Given market expectations that interest rates may rise later this year, ABSA Participation Bonds is now giving investors the opportunity to benefit from this possible increase immediately.

It will also protect new investments from any reduction in interest rates.
The company says that interest rates on all new participation bonds have been increased to 11,5% with immediate effect, which is one percentage point higher than the existing rate. The new interest rate is also guaranteed to June next year.
This means that in the less likely event that interest rates decline investors will still receive the new rate. However, if interest rates increase by more than one percentage point the new rate will continue to be amended upwards.
The new rate applies to all new investments, even for existing investors.
Current investments will receive the increased rate as soon as domestic interest rates increase.
Kelvin Bell, ABSA Trust’s product manager, says that it looks more likely that interest rates have bottomed out. “The next interest rate movement will probably be upwards, but is difficult to say when this will happen. It might be anytime over the next couple of months.
“This special offer, therefore, is to support our view on interest rates, which means that clients’ existing participation bonds will probably also earn an interest rate of 11,5% soon,” he added.
ABSA Participation Bonds’ offer on new participation bonds works as follows:

Copyright © Insurance Times and Investments® Vol:13.7 1st August, 2000
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