Fixed Income and Dealings

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[column 12]The Fixed Income and Dealing Division manages all fixed interest-bearing instruments in which the PIC invests.

A fixed income instrument is issued by an entity, for instance, a corporate or a parastatal, who approaches the PIC to borrow funds and, in exchange, then issues a bond or a fixed interest-bearing security.

All fixed income activities are managed internally by the Fixed Income team. The team is also responsible for the execution of all transactions generated for both the Equities and the Fixed Income divisions.

The division currently consists of 8 people, which include a divisional General Manager, portfolio managers and dealers. The dealers deal with the equity markets based on instructions from the equity division and according to the clients’ mandates, which determine where and how to invest on their behalf.

As a member of the Bond Exchange of South Africa (BESA), the PIC only transacts with other BESA members, and only invests in instruments listed on BESA.

The Fixed Income and Dealings Division handles both short-term investments of up to one year (Money Market), as well as longer term investments (Capital Market).

In terms of the Capital Market investments, we are authorised to invest in debt issued by the South African government, parastatals, corporate entities and securitisation vehicles. The scope and extent of each investment is dependent on the national credit rating assigned to a specific entity.

Most of the Money Market investments are with the big domestic banks- these investments are primarily for short-term finance. In addition, we invest with the larger corporates, parastatals, securitisation vehicles and smaller banks, again depending on their national credit rating and their overall credibility.

The division uses the All Bond Index (ALBI) to compare the performance of bonds and the STeFI (short-term fixed interest) index to measure performance in the cash and money markets. Our constant goal is to outperform these indices on our client’s behalf – and for the record, we have always outperformed them.

Assessed against these benchmarks, the PIC consistently delivers returns in line with or exceeding the objectives set in our clients’ investment mandates.

Although the Fixed Income and Dealing Division currently only makes investments in the domestic market, the new mandate now allows for overseas investments, which are currently being investigated.[/column]