On 28 January 2016, the Governor of the South African Reserve Bank (Sarb), Lesetja Kganyago, announced a 50-basis point increase in the repo rate. The repo rate is the rate at which the Sarb lends money to banks and the prime lending rate (at which consumers borrow money) will increase to 10.25%.
For Ecsponent investors invested in Class C preference shares, this increase is good news as the monthly dividend rate will increase from 11.69% to 12.11%. Further repo rate increases during 2016 are widely anticipated and the return on this investment, which yields a rate of prime plus 4% per annum, will be adjusted accordingly with each increase.
The increase will reflect in Ecsponent’s next dividend payment.
For more information about investing in Class C preference shares or the recent interest rate increase, please contact us at info@ecsponent.com.