Gautrain to get extra R1bn from province

[Robin Hood]

THE Gautrain project will get an extra R1bn injection from the provincial government’s reserves to reduce its borrowing from R5,2bn to R4,2bn.

Over the medium term, the Gautrain project will get R11,6bn from the Gauteng government
More... (http://www.businessday.co.za/articles/economy.aspx?ID=BD4A717145)

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Monies get spend but poverty remains? Also, seeing more BEE companies gets the contracts i really hope they know what they're doing as i'm def not going to ride a train with the worry of wheather the ppl that were involved with the project were skilled enough so i can risk my life on it :eek:

[Piepalook]

THE Gautrain project will get an extra R1bn injection from the provincial government’s reserves to reduce its borrowing from R5,2bn to R4,2bn.

Over the medium term, the Gautrain project will get R11,6bn from the Gauteng government
More... (http://www.businessday.co.za/articles/economy.aspx?ID=BD4A717145)

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Monies get spend but poverty remains? Also, seeing more BEE companies gets the contracts i really hope they know what they're doing as i'm def not going to ride a train with the worry of wheather the ppl that were involved with the project were skilled enough so i can risk my life on it :eek:

I know the guy in charge.We worked together 15 years ago.

Old school

No problem there.

[Robin Hood]

I know the guy in charge.We worked together 15 years ago.

Old school

No problem there.

some relief, thx :)

[PeterCH]

Is the Gautrain supposed to be a Maglev bullet train like the Shinkansen?
Only a handful of countries have bullet trains (France, UK, Germany, CHina, Korea and Japan) - not even the US has a proper Bullet train, or is it just an ordinary train
with a cathyname and a great excuse to syphon off funds?

[Piepalook]

Is the Gautrain supposed to be a Maglev bullet train like the Shinkasen?
Only a handful of countries have bullet trains (France, UK, Germany, CHina, Korea and Japan) - not even the US has a proper Bullet train, or is it just an ordinary train
with a cathyname and a great excuse to syphon off funds?

Slow.

[PeterCH]

Slow.

Slow train?

[Piepalook]

Slow train?

Yes. With milk stops on the way!

Just joking.

Not faster than 180 kmh.

7 stops. 80 km route.

[boramk]

Yes. With milk stops on the way!

Just joking.

Not faster than 180 kmh.

7 stops. 80 km route.

ahhhh, I remember my train ride in Korea 4 years ago.... 310KM/h:D

[Piepalook]

ahhhh, I remember my train ride in Korea 4 years ago.... 310KM/h:D


310 kph is impressive.

At least now we will have a direct link between Pretoria and Johannesburg.

Paul Kruger refused it many years ago.

You always had to change trains at Germiston.

[PeterCH]

Maybe they want to beat the fastest bullet train in the world? The JR-Maglev (JR-Maglev MLX01) at 581 km/h? :)
http://en.wikipedia.org/wiki/JR-Maglev

[bb_matt]

I always figured the Gautrain was a case of "We can be first world too!" by the ANC, not to mention a bit of a boost for 2010.

Now don't get me wrong, I'm all for the modernisation of transport in SA, but at what expense?

I think the obvious one here would be the cost of repairing the road infrastructure in SA, which has been estimated in the billions.

That's why I think the Gautrain is more of a PR exercise than a viable transport solution.

The biggest hole in the plan is the "feeder" routes to the train - it's all very well building a train linking two cities, but how do you get to the train from your house?
Where do you park?
Are there shuttle buses?
What will it cost?

Other countries who have trains such as this, have a decent public transport infrastructure to start with.

I can't help feeling the entire thing is one big white elephant.

[Road runner]

My feelings as well. ^^ Lets think of a name...


Dumbo?

[HavocXphere]

Where do you park?
In the parking garages they are building next to the terminals.

Are there shuttle buses?
AFAIK there are. How many and at what price is another matter.

I'm kinda ambivalent about the Gautrain atm. Could either pan out great or disastrous.

[capetownguy]

the gautrain is as much about the future of public transport as it is about PR.
its a top notch, high quality train, that costs a ton!
its the level of quality that commuters should demand along all major routes and in major cities. government allocates under R1 billion to cities and expects them to form miracles/some form of public transport system in 3 years. If the plan doesnt work, cities get blamed not government who refuse to realize the cost of providing a public transport system.

as for the cost of the gautrain im 50/50. its going to cost around R25 billion i think... with R12bn from government, which I think could have been much better spent by increasing the transport allocations to other cities in south africa, allowing them fund a decent public transport system.

[Road runner]

The money for the stadia and trains would have been better spent building power stations and dams. Both are going to be white elephants after the event.

[capetownguy]

if u say so. as before..which stadia.
money for power stations was always there..its not because of the stadia that gvt were too stupid to realize they had to build power stations.

[MacNabs]

The money for the stadia and trains would have been better spent building power stations and dams. Both are going to be white elephants after the event.

True, but the gautrain is not suppose to be ready by 2010, in fact it will be a white elephant in 2010 as it will not be completed yet. Gautrain was never part of the 2010 bid and there is therfore no pressure in having it completed by then either. 2010 supoorters will have to make use of the current public transport system (taxi's and trains) into Soweto to watch the matches. :eek: Making matters worse, eskom needs to supply most of the power load, and thats a joke on its own.

I dont see many middleclass people making use of the gautrain once its completed anyway. Security would be a major concern for me, even if the trains are 100% safe, walking to and from stations will not be. Its a failure before the project has even been completed. Where I live in NZ we drive our cars to the train stations, we park them their and we catch the trains into town, would like to see this working in joburg, getting back to your car and its gone, worse still, you hijacked getting into it.

[Captain Slog]

I dont see many middleclass people making use of the gautrain once its completed anyway. Security would be a major concern for me, even if the trains are 100% safe, walking to and from stations will not be. Its a failure before the project has even been completed. Where I live in NZ we drive our cars to the train stations, we park them their and we catch the trains into town, would like to see this working in joburg, getting back to your car and its gone, worse still, you hijacked getting into it.

Don't worry dude, just stay in new zealand, nothing bad EVER happens there, actually NOTHING ever happens.

[Captain Slog]

Is the Gautrain supposed to be a Maglev bullet train like the Shinkansen?
Only a handful of countries have bullet trains (France, UK, Germany, CHina, Korea and Japan) - not even the US has a proper Bullet train, or is it just an ordinary train
with a cathyname and a great excuse to syphon off funds?

Only the Japanese have a bullet train - all the others have their own names and different technologies. French TGV runs on tracks and is amazing. The poms have an aging rail network and no high speed trains save the intercity 125s which are not high tech. China has one maglev train that, iirc is still largely experimental and german. You missed the train from Central to KLIA - that goes at about 350kph iirc.

OOOOOO not even the US!!! OOOOO wow - forget the bloody yanks for a change!!! Only rednecks catch trains in the states anyway - like us they all have cars.

The Gautrain is comparable to any rail system in any country - it is not going any great distances and will still be the fastest train in Africa. Just because black people are working on it does not mean that it will be unsafe.

The latent racism on this forum is sometimes astounding - i thought that all you lot lived in perth by now and spent your time swearing at brown cricketers in Afrikaans.!!

[capetownguy]

people working on gautrain include both top locals and internationals. its prob the most sophisticated and advanced team of people we've had work on a major project in RSA.

Apparently the Sandton to OR Tambo route will be complete by 2010.
The transport to Soccer City will be provided by bus shuttle services and the new BRT Rea Vaya system.

Visit skyscrapercity.com for all Johannesburg related transport projects.

http://www.skyscrapercity.com/showthread.php?t=494316

[bb_matt]

...The poms have an aging rail network and no high speed trains save the intercity 125s which are not high tech..

Well, we finally sorta "made it", with the new Eurostar service from St. Pancreas (moved from Waterloo), although we can't run the service at full speed, because our rail network isn't up to scratch.

Yeah, I know you guys in South Africa will say "at least you have a rail system", but the fact is, the UK rail network is a far cry from the glory days. It's now a mess of private interests, continuous upgrades, delays, exorbitant prices and overcrowding.

I'd love to see the Gautrain being a success, but all the things already pointed out in this thread are a concern. Crime is most definately a key worry. If the police cannot even protect people in thier own suburbs, how the hell can they protect them on a rail network?

I can see it now - gangs of thugs with AK47's robbing an entire train of commuters.

The cost is going to be the key issue, I don't see how the poor could afford the ticket costs (there's no way they will be as cheap as a taxi), leaving the middle class as the target market.

Considering the destinations of the train, it does make more sense as a middle class enterprise - ferrying office workers back and forth - and herein lies another big issue.

How do you convince the countless thousands of car drivers to give up the convenience of driving to work?

Yes, driving to work is an extreme pain, with the level of traffic, broken street lights, potholes etc. - but at least your in your own car.

Plus, to get to the train, your going to have to drive your car to a car park anyway - and then pay the cost of parking for a day.

It really doesn't add up. It's a first world operation in a third world country.

It's akin to putting a cruise liner in the middle of the Vaal Dam :)

[kingmonty]

...
Yeah, I know you guys in South Africa will say "at least you have a rail system", but the fact is, the UK rail network is a far cry from the glory days. It's now a mess of private interests, continuous upgrades, delays, exorbitant prices and overcrowding.The train is meant as a rapid link to ease congestion between Jhb and Pretoria and to link the Airport to major destinations. It's not meant to be a "poor man's" solution. As it stands now, the government likely doesn't want to cross that bridge right now, the taxis have an astounding influence on the government, and it's not a war the government would want to get into.
I'd love to see the Gautrain being a success, but all the things already pointed out in this thread are a concern. Crime is most definately a key worry. If the police cannot even protect people in thier own suburbs, how the hell can they protect them on a rail network?Criminals are not in charge. There is a battle keeping crime under control. Keeping the criminals off the train would be a far side easier than keeping them off a public road system. I think the people would likely be far safer on the train than in their cars. That being said, crime on trains is not unique to this country - your own country has its fair share thereof.
I can see it now - gangs of thugs with AK47's robbing an entire train of commuters.Yeah, with bandannas - just like the old wild west?
The cost is going to be the key issue, I don't see how the poor could afford the ticket costs (there's no way they will be as cheap as a taxi), leaving the middle class as the target market.Which they are...
Considering the destinations of the train, it does make more sense as a middle class enterprise - ferrying office workers back and forth - and herein lies another big issue.The existing taxi and bus service will serve as the shuttle service
How do you convince the countless thousands of car drivers to give up the convenience of driving to work?By charging every road user a toll fee for the privilege. That's exactly what they're introducing by the way - all our Jhb and Pretoria freeways are going to be turned into expensive toll roads, the early indication is around R0.50c per kilometer.
Yes, driving to work is an extreme pain, with the level of traffic, broken street lights, potholes etc. - but at least your in your own car.Not always such a perk, and given the rate of our fuel increases over the last two years and coupled with the freeway toll road plan it will become an expensive perk.
Plus, to get to the train, your going to have to drive your car to a car park anyway - and then pay the cost of parking for a day.Apparently the park and ride tariffs will be far more affordable than the fuel price of the commute into town.
It really doesn't add up. It's a first world operation in a third world country.

It's akin to putting a cruise liner in the middle of the Vaal Dam :)Not even close. It's an attempt at a solution, and thus far the only good thing this government has actually done to come up with new jobs and start working on the public transport problem.

[kevinswan007]

True, but the gautrain is not suppose to be ready by 2010, in fact it will be a white elephant in 2010 as it will not be completed yet. Gautrain was never part of the 2010 bid and there is therfore no pressure in having it completed by then either.

August 18 2006 at 02:54PM
Gautrain ready for 2010 - Radebe

The Gautrain Rapid Rail link would be ready for the 2010 Soccer World Cup, Transport Minister Jeff Radebe said on Friday.

Notwithstanding utterances from some involved that it would not be ready, and delays on the project, Radebe said he believed Gautrain would be moving come the Soccer World Cup.

"We are doing everything in our power as government to ensure that the construction of the Gautrain is going ahead," Radebe said.

He was speaking at a press conference held on the last day of a transport lekgotla held outside Pretoria where transport infrastructure for the 2010 Soccer World Cup was one of the main points on the agenda.




He said the lekgotla approved the 2010 action agenda for public transport infrastructure development.

"R3.8-billion has been set aside for this purpose and is meant to leverage other funds available to develop public transport infrastructure," he said.

Some of that funds would be going to projects approved by the lekgotla, including R700-million for improved bus and taxi infrastructure and R1.6-billion for capital expenditure projects.

The department has already established a World Cup office structure to oversee the implementation of the action agenda. - Sapa


Promises, promises...

[kevinswan007]

One of Africa's largest transportation projects, Gautrain, is making good progress and will be completed by 2010 when the soccer world cup is hosted by South Africa, Gautrain spokesperson Dr Barbara Jensen said.

Gautrain will link South Africa's capital Pretoria and Johannesburg - Africa's hub - with Johannesburg International Airport (JIA) through Sandton, providing both urban airport and commuter type services.

Construction for the project is expected to commence in 2005 on the first phase of the operation - the Sandton-JIA and Sandton-Pretoria routes - while the remaining routes will be finished just in time for the soccer event.

Jensen said the second phase linking Johannesburg and other destinations will be delayed by the construction of a tunnel necessitated by landscape dynamics in the area.

The project will consist of 80 kilometres of railway lines and 10 stations, with some 104,000 passengers expected to use the service daily. There will be a train at least every 10 minutes during peak hours.

Some 250 new bus coaches will be used, while more than 9,000 new parking bays will be required.

Around 48,000 jobs will be created during construction and once Gautrain is in operation 1,200 permanent jobs will be created.

Two consortia have qualified to participate in the procurement phase of the project - Bombela Consortium, consisting of Murray & Roberts (MUR) and black economic empowerment (BEE) participants; and Gauliwe Consortium, consisting of Grinaker-LTA and a BEE firm.

"We are working around this range and R7.9 billion is earmarked for the project," Jensen said, adding, however, that the amount could change owing to other factors.

The transport sector accounts for about 10% of South Africa's gross domestic product (GDP). Gauteng makes up a huge portion of the country's GDP pie and there is a corresponding dominance in transport.

The project will play an important role in stimulating economic growth and job creation in Gauteng.

I-Net Bridge 19 May 2004

[kevinswan007]

what amazes me is how the amounts change in every story.
3 billion, then 7 billion, then 15 billion?

wish I could talk in billions like it meant nothing

[Skinner]

Another example of the government's bungle-up; empty promises of delivery from less than 2 years ago!

[Robin Hood]

I can see it now - gangs of thugs with AK47's robbing an entire train of commuters.

This isn't out of the question as it IS a good point...will just hope and see what happens :rolleyes:


It really doesn't add up. It's a first world operation in a third world country.
Thats what i cant figure out myself as monies could have been used for much better purposes than this. The country is poor but yet the "Top Brass" want to send out an "image" of how well its going on here, but unfortunately thats the way of the "thinking capability" of the Govt and i think you'll have to go bloody far to beat THAT!

[bb_matt]

Just a "positive?" slant here, about the escalating cost, that's a worldwide issue, not just an SA one.

Pretty much all engineering operations on this scale spiral so far of the original budget, it's almost comical. I reckon it's a bit of a ruse to get these big projects past the tax payers - "It'll only cost X amount, honest!" :D

Kingmonty - valid points, as you'll see, I'm trying to see the positive side of this - I do hope to see it succeed, if only because I love rail as a transport option!

But the one point about motorists opting to use the train instead of the car - mate, they are still battling with that here in the UK.

Rail was king before cars came about, so it can be said that the demise of the UK rail network from it's brief glory years was due to the rise of the motor car.

Millions of people here use trains on a daily basis. It's a fantastic experience for day trippers - on a weekend etc. it works great. For commuters to work and back, it's usually a miserable and woefully expensive exercise.

[PeterCH]

Only the Japanese have a bullet train - all the others have their own names and different technologies. French TGV runs on tracks and is amazing. The poms have an aging rail network and no high speed trains save the intercity 125s which are not high tech. China has one maglev train that, iirc is still largely experimental and german. You missed the train from Central to KLIA - that goes at about 350kph iirc.

OOOOOO not even the US!!! OOOOO wow - forget the bloody yanks for a change!!! Only rednecks catch trains in the states anyway - like us they all have cars.

The Gautrain is comparable to any rail system in any country - it is not going any great distances and will still be the fastest train in Africa. Just because black people are working on it does not mean that it will be unsafe.

The latent racism on this forum is sometimes astounding - i thought that all you lot lived in perth by now and spent your time swearing at brown cricketers in Afrikaans.!!


The Bullet Train thing is a generic lay term. I guess you could call it a really fast aerodynamically designed train. The French, Germans and Brits have those AFAIK in Europe. The Chinese have a fully functional train running between (Google it, I forgot) and they're building a second one, which will be the longest piece of track in the world. Taiwan, Korea and Japan also have them. The Yanks have a few would be pretenders and I believe they want to build a proper one. As for catching trains - these fast trains are amazing, they're smooth rides and much better than driving an SUV on a packed highway - you're travelling in a straight line at speeds of 180-350km/h = no car can match that. I've spoken to people who've taken some
of these trains and they swear by them.

A country like Japan or France can afford such systems, a country like ours
where people die daily because of lack of funds for basic treatment (no cash for dialysis for example) should not be doing stupid things IMHO,
this is a 3rd world country after all.

[Piepalook]

The Bullet Train thing is a generic lay term. I guess you could call it a really fast aerodynamically designed train. The French, Germans and Brits have those AFAIK in Europe. The Chinese have a fully functional train running between (Google it, I forgot) and they're building a second one, which will be the longest piece of track in the world. Taiwan, Korea and Japan also have them. The Yanks have a few would be pretenders and I believe they want to build a proper one. As for catching trains - these fast trains are amazing, they're smooth rides and much better than driving an SUV on a packed highway - you're travelling in a straight line at speeds of 180-350km/h = no car can match that. I've spoken to people who've taken some
of these trains and they swear by them.

A country like Japan or France can afford such systems, a country like ours
where people die daily because of lack of funds for basic treatment (no cash for dialysis for example) should not be doing stupid things IMHO,
this is a 3rd world country after all.

I agree.
There are lots of suffering out there that could be alleviated.

The money spent on Gautrain could have made a difference to a lot of peoples lives.

[DJ...]

OOOOOO not even the US!!! OOOOO wow - forget the bloody yanks for a change!!! Only rednecks catch trains in the states anyway - like us they all have cars.

Certainly not the case in the major metropolitan areas.


By charging every road user a toll fee for the privilege. That's exactly what they're introducing by the way - all our Jhb and Pretoria freeways are going to be turned into expensive toll roads, the early indication is around R0.50c per kilometer.Not always such a perk, and given the rate of our fuel increases over the last two years and coupled with the freeway toll road plan it will become an expensive perk.

I wasnt aware of this. When is this taking place? I believe it is a ridiculous plan considering the number of commuters that travel this road every day.

For some, a train is not an option as you you might require your car for work during the day or prefer the flexibility of your own transport. Tolls to and from the office are not a viable company expense and it becomes inhibitevely too expensive to travel the n1 to work then. Can you imagine the congestion on the backroads then? What a farce!

[BobbyMac]

By charging every road user a toll fee for the privilege. That's exactly what they're introducing by the way - all our Jhb and Pretoria freeways are going to be turned into expensive toll roads, the early indication is around R0.50c per kilometer.
I was wondering why they're so keen to introduce that new toll road thing here :D Now it all makes sense - to force people to use the Gautrain. Pretty smart move by the government.

[BobbyMac]

Certainly not the case in the major metropolitan areas.



I wasnt aware of this. When is this taking place? I believe it is a ridiculous plan considering the number of commuters that travel this road every day.

For some, a train is not an option as you you might require your car for work during the day or prefer the flexibility of your own transport. Tolls to and from the office are not a viable company expense and it becomes inhibitevely too expensive to travel the n1 to work then. Can you imagine the congestion on the backroads then? What a farce!

He's referring to this: http://www.iol.co.za/index.php?click_id=13&set_id=1&art_id=nw20070822222153686C974579 and http://www.arrivealive.co.za/oldletter.asp?p=letter&t=letter&id=630

[dlk001]

Also, seeing more BEE companies gets the contracts i really hope they know what they're doing as i'm def not going to ride a train with the worry of wheather the ppl that were involved with the project were skilled enough so i can risk my life on it :eek:

What aspect of the contracts are you concerned about?

[Robin Hood]

What aspect of the contracts are you concerned about?

The workmanship, but its sorted out thanks.

[dlk001]

The workmanship, but its sorted out thanks.

Good thing its sorted out!

[dlk001]

I always figured the Gautrain was a case of "We can be first world too!" by the ANC, not to mention a bit of a boost for 2010.

Now don't get me wrong, I'm all for the modernisation of transport in SA, but at what expense?

I think the obvious one here would be the cost of repairing the road infrastructure in SA, which has been estimated in the billions.

That's why I think the Gautrain is more of a PR exercise than a viable transport solution.



Remember that the Engineering Industry expects have not come out against the Gautrain. They are big beneficiaries in this too. They love prolonged state of the art projects!

[Robin Hood]

Good thing its sorted out!

If you were suggesting BEE can be accepted as 100% guaranteed workmanship, think again brother. Its like Windows Vista...it has to prove itself first. I'm very fussy when it comes to workmanship...especially if work is being implemented WITHOUT merit. Govt accept contracts from BEE because there are Blacks in it...I accept contracts because of the contractor's knowledge and experience...Personal choice :rolleyes:

[sox63]

Without debating what type of train it is. :)

I think this is a case of prudent financial management? Reducing the amount of debt with the cost debt set to rise? My simple working brain tells me it's like putting down a bigger "deposit".

[dlk001]

If you were suggesting BEE can be accepted as 100% guaranteed workmanship, think again brother. Its like Windows Vista...it has to prove itself first. I'm very fussy when it comes to workmanship...especially if work is being implemented WITHOUT merit. Govt accept contracts from BEE because there are Blacks in it...I accept contracts because of the contractor's knowledge and experience...Personal choice :rolleyes:

What aspects of my writing today lead you to an assumption about me possibly suggesting anything with respect to BEE and workmanship levels?

With respect to the Gautrain, you raised a concern and as a person working on some design aspects of the project, I wanted to know which areas of the contracts specifically concern you.

Not sure how Windows Vista, Blacks and Govt have to do with discussions about aspects of the Gautrain contracts that concern you.

[DJ...]

Without debating what type of train it is. :)

I think this is a case of prudent financial management? Reducing the amount of debt with the cost debt set to rise? My simple working brain tells me it's like putting down a bigger "deposit".

Not sure how this is financed but I am sure there must be a prospectus out there for it - will check. However I am 99% sure that the terms of their debt would have been contracted ages ago unless the terms state that is is a floating rate note. FRNs are usually linked to inter bank transfer rates though.

If it is a publicly traded bond then the only losers of higher cost of debt would be investors whose yield curve might change depending on what they are tracking it against. And these investors would not be govt or they wouldnt have gone to market in the 1st place.

I expect this is the opposite of "prudent" financial management. Although I am getting a little more negative each day I spend on this forum to tell you the truth!

[sox63]

Not sure how this is financed but I am sure there must be a prospectus out there for it - will check. However I am 99% sure that the terms of their debt would have been contracted ages ago unless the terms state that is is a floating rate note. FRNs are usually linked to inter bank transfer rates though.

If it is a publicly traded bond then the only losers of higher cost of debt would be investors whose yield curve might change depending on what they are tracking it against. And these investors would not be govt or they wouldnt have gone to market in the 1st place.

I expect this is the opposite of "prudent" financial management. Although I am getting a little more negative each day I spend on this forum to tell you the truth!

Could you elaborate on the FRN thingy, the only thing I found has to do with US Fed Bank.

I don't think banks would fix a rate on these type of amounts, they would lose a fair bit of change if the rates moved in an unfavourable direction for them.

[Robin Hood]

What aspects of my writing today lead you to an assumption about me possibly suggesting anything with respect to BEE and workmanship levels?

With respect to the Gautrain, you raised a concern and as a person working on some design aspects of the project, I wanted to know which areas of the contracts specifically concern you.

Not sure how Windows Vista, Blacks and Govt have to do with discussions about aspects of the Gautrain contracts that concern you.

Basicly very simple...I just want BEE to prove itself first before i'll be 100% comfortable with their workmanship...Like i said above just a personal point of view...no pun intended :)

[DJ...]

Could you elaborate on the FRN thingy, the only thing I found has to do with US Fed Bank.

I don't think banks would fix a rate on these type of amounts, they would lose a fair bit of change if the rates moved in an unfavourable direction for them.

FRN = floating rate notes. This means that the coupon (interest rate) is linked to the rate at which banks agree to transfer money between them. Actually the banks lose absolutely nothing if the rate changes, it is the investors who lose as that is the point of publicly traded bonds.

Banks originate the debt and sell this off to investors. ie they sell the risk. That is essentially what bond trading is - the trading of risk!

[sox63]

FRN = floating rate notes. This means that the coupon (interest rate) is linked to the rate at which banks agree to transfer money between them. Actually the banks lose absolutely nothing if the rate changes, it is the investors who lose as that is the point of publicly traded bonds.

Banks originate the debt and sell this off to investors. ie they sell the risk. That is essentially what bond trading is - the trading of risk!

Bare with me here, that rate you mentioned is for inter-bank dealings. Goverment is a customer of the banks. What rate would they get?

I remember with the Armsdeal investigations, it was revealed that was financed from loans. And I would wonder, if that is the way this project was funded.

[DJ...]

I don't think banks would fix a rate on these type of amounts.

They certainly do. It depends on the company's Fitch, S&P or Moody's rating. These are the credit rating agencies who rate all debt, including government debt. It also depends on market conditions and the maturity date of the bond.

If the DCM team believes they can sell your debt at a fixed rate, they will as this is sometimes easier to sell to investors based on their investment strategies. It can get really complex from here but a floating rate note vs fixed rate note merely changes the financial models when calculating the risk. Regardless, you can win or lose on both depending on how the interest rates change.

[dlk001]

Basicly very simple...I just want BEE to prove itself first before i'll be 100% comfortable with their workmanship...Like i said above just a personal point of view...no pun intended :)

If you chose not to ride the train because you are thinking people involved in it were not skilled enough, then its your own choice.

I was just curious as to what aspects of the contracts concerned you especially related to people not being skilled enough!

Indeed everyone has to prove themselves. This is why we have Pr Engineers, Technologists, Quantity Surveyors, Project Managers, Building Supervisors etc overlooking the design and execution of the project.

[DJ...]

Bare with me here, that rate you mentioned is for inter-bank dealings. Goverment is a customer of the banks. What rate would they get?

I remember with the Armsdeal investigations, it was revealed that was financed from loans. And I would wonder, if that is the way this project was funded.

Government bonds. They raise the money publicly. Governments do this, municipalities do this too. They issue government debt or municipal debt which is 9/10 used as a hedging tool by investors and are considered risk free (unless you invested in Zim govt debt). Govt secures this through the reseve bank though, not private banks.

[sox63]

Government bonds. They raise the money publicly. Governments do this, municipalities do this too. They issue government debt or municipal debt which is 9/10 used as a hedging tool by investors and are considered risk free (unless you invested in Zim govt debt). Govt secures this through the reseve bank though, not private banks.

So the R 1bn noted in the article would go to the Reserve Bank?

[DJ...]

So the R 1bn noted in the article would go to the Reserve Bank?

Nope - it would go to the government. The reserve bank will secure the loan. They are in essence borrowing money from whoever chooses to buy the bond. So if I purchase the bond, then I am effectively lending the govt money at a fixed rate which will be redeemable on a specific date. The trading of the bond and general market conditions and macro-economic conditions then determines the price associated with it.

Easy way to explain:

Govt/company wants money

Step 1: Investment bank/reserve bank secures the loan for a specific amount. They give the money to said company/government

Step 2: Said bank then sells the risk in the form of bonds in specific denominations to the general public. This is usually in the form of asset managers, insurance companies etc.

Step 3: Once all the risk is sold off, the bond is traded like an equity but more over the counter than via an exchange until its maturity at which point said company/govt must repay the debt to investors. In the interim, interest payments are made to the investors.

(Although if the debt cannot be sold off before going to market, it might never reach there in which case your DCM team sucks, your investment bank sucks and it just became a very costly excercise as CEO or Financial Director and your board is likely to sack your arse)

Much like equites except the trading is of debt and not ownership of a company. And the financial models are calculated completely separate from the equities price. Various factors such as events of default, use of proceeds and other clauses change the financial risk models of these investments - they are tricky and can be dangerous. They typicaly return less than the equities market but are much less risky. Although then you can balance the risk with high-yield investment which are commonly known as junk bonds (porly rated credit). Its all to do with cash flows.

OK, debt investment 101 over. ;)

[PeterCH]

Indeed everyone has to prove themselves. This is why we have Pr Engineers, Technologists, Quantity Surveyors, Project Managers, Building Supervisors etc overlooking the design and execution of the project.

SA authorities are incredibly corrupt, they're even shutting down the agency they initially set up to fight corruptions - Scorpions. With
such a high level of corruption and low level of accountability (when
do we ever hear government ministers or corporate execs own up or apologise
for any of their f-ups) I have serious issues with any system which
ins't based on independetly verified merit.

[dlk001]

SA authorities are incredibly corrupt, they're even shutting down the agency they initially set up to fight corruptions - Scorpions. With
such a high level of corruption and low level of accountability (when
do we ever hear government ministers or corporate execs own up or apologise
for any of their f-ups) I have serious issues with any system which
ins't based on independetly verified merit.

Government leaves lots to be desired. That's a topic outside design and execution of the Gautrain and its associated engineering projects.