Treasury moves R113bn in debt to new ZARONIA benchmark
National Treasury has secured investor backing to move R112.9bn in floating-rate government debt from JIBAR to ZARONIA, as South Africa prepares to retire the long-standing benchmark at the end of the year.
South Africa is transitioning away from using the JIBAR benchmark for interest rates on government debt, shifting R112.9 billion in bonds from JIBAR to ZARONIA. JIBAR currently pays 7.22%, while ZARONIA is around 7%. Treasury secured approval to modify two floating-rate bonds, RN2027 and RN2035, replacing JIBAR with compounded ZARONIA as the interest benchmark.
This change is part of broader financial system reforms ahead of JIBAR's permanent discontinuation at year-end. ZARONIA reflects the rate banks pay for overnight funding, calculated from actual transactions. The Reserve Bank introduced ZARONIA in November 2022, designating it as JIBAR's successor due to structural weaknesses in JIBAR.
Financial institutions are prohibited from creating new JIBAR-linked contracts, except for limited exceptions. Existing JIBAR-linked contracts must be transitioned to alternative rates or contain provisions addressing JIBAR's discontinuation. The move aims to preserve contract economics and maintain fair returns for investors.
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