Die MOS Bond Issuance: Frequently Asked Questions
Everything you need to know about Die MOS 10Y Prime +2% Floating Rate Bond, issued exclusively on Mesh.trade.
MOS Uitreiker, a wholly owned subsidiary of Die MOS Inisiatief, has issued Die MOS 10Y Prime +2% Floating Rate Bond on Mesh.trade.
It’s a piece of history, being the first tokenised bond in Africa; and it’s also an investment in the future, as the bond aims to raise ZAR100 million to expand Die MOS’s network of private schools offering mother tongue instruction in South Africa.
It’s a new bond (or note), and you may not be familiar with Mesh.trade’s cutting-edge investment platform, so here’s a quick guide to help you understand the details of the issuance, how to invest, what the guarantees are, and how you’ll receive your interest payments.
The Basics
What is a bond?
A bond (or note) is a debt security issued by a company or government. It’s a lot like a loan from the investor to the issuer, with a predetermined term and regular interest payments (known as coupons) paid by the issuer. Unlike a traditional loan, however, the principal amount is returned to the investor upon maturity.
What is a floating rate bond?
A floating rate bond offers variable interest payments, made at a set frequency, tied to the South African Prime Rate until the principal (or original investment amount) is returned to the investor at maturity.
How does this apply to the Die MOS bond?
In the case of the Die MOS 10Y Prime +2% Floating Rate Bond, the term of the bond spans 10 years, with a maturity date set for 30 April 2034. The applicable interest rate for the quarterly coupon payments is the Prime Rate (which in April 2024 was 11.75%) plus 2%. This means that even if the Prime Rate changes, investors will always get 2% above Prime in returns.
How to Invest
How do I invest in Die MOS?
To invest in Die MOS bond, you’ll need to open a Mesh account, fund your account, and then place a Buy Order on the Bond’s Asset Detail page.
When you click on the “Place Buy Order” button, a pop-up window will open, allowing you to indicate how many notes valued at R5 000 each you wish to buy.
The Place Buy Order button will only be available to investors from the date the Subscription book opens (00:01 on 11 April 2024), up until the date and time indicated when the book closes, (11:59 PM on 26 April 2024). Investors can place one or more buy orders, right up until the date and time that the book closes.
Remember, you must have funds in your Mesh account to cover the investment amount of the Buy Order.
How do I create a Mesh account?
Creating a Mesh account is a straightforward process. Simply visit app.mesh.trade, sign up, and follow the provided instructions, ensuring you have necessary documents (including a digital copy of your ID and a proof of address document) handy.
Is there a minimum capital investment amount?
Yes. The MOS bond is issued directly to investors via a note or token at a principal amount of R5 000 per token, so you’ll need to make a minimum investment of R5 000.
Can I subscribe for a fraction/part of the bond?
No. Investors must subscribe to whole numbers of bond notes or tokens. That means you’ll need to invest in increments of R5 000.
How do I fund my Mesh account?
It’s as easy as doing an EFT – create a beneficiary using the Mesh bank details provided. Please make sure to use your unique reference number to ensure the seamless processing of the mZAR funds into your Mesh account.
What is mZAR?
mZAR is a fully collateralised South African ZAR stablecoin, which is used on the Mesh platform for financial transactions. One mZAR equals one ZAR at all times.
By when do I need to make the investment?
The subscription offer opened on 11 April 2024 and closes at 11:59 PM on 26 April 2024 – so you’ll need to make sure that your Mesh account is fully funded before that deadline.
Try not to leave it to the last minute. With some banks it can take anywhere between 12 and 36 hours for an EFT payment to reflect.
How does the two week subscription period work?
During the two-week subscription period, you can subscribe to invest in the bond by clicking the “Place Buy Order” button and then allocating how many tokens or notes you want to buy (in increments of R 5000).
This is the Primary Market where once you place a “Buy Order” Mesh allocates the funds (mZAR) from your account to the Bond, which means your subscription is registered and your funds have been allocated. Your funds remain allocated and can’t be accessed by either party until the subscription period has ended.
The book closes at 23:59 on the 26th of April. The Bond will officially be issued on 1 May 2024.
On issuance, the number of tokens that you’ve subscribed to will be transferred into your account and the allocated funds (mZAR) will be transferred into Die MOS’s account. This transfer happens at the same time and you will receive a notification that you have become a registered owner of Die MOS bond tokens.
Fees
Will I pay fees when funding my Mesh account?
No. Fees are not charged for registering on Mesh or funding your account.
What fees are applicable to the Mesh platform?
While Mesh does not charge any fees for subscribing to Die MOS bond, defunding fees will apply if you opt to withdraw your quarterly interest payments or the principal amount at maturity. Withdrawal fees do not apply if you opt to re-invest your quarterly interest payment. However, trading fees may apply if you purchase other assets on the Mesh platform.
Guarantees and worst-case scenarios.
What is an Event of Default?
An Event of Default is a predefined circumstance that allows a lender to demand full repayment of an outstanding balance before it is due. These include failure to pay on the due date, actions leading to liquidation or winding-up, or breaches of contract terms. In case of default, note holders are entitled to demand payment from the guarantor within a specified timeframe.
What if Die MOS is unable to pay the interest or principal repayment due to investors?
The Trust vir Afrikaanse Kuns, Kultuur en Erfenis (“TAKKE”) acts as the underwriter and guarantor for the Die MOS bond/note. In the unlikely case of Die MOS being unable to fulfill its obligations, TAKKE is legally obliged to cover those payments within a specified timeframe. Given those guarantees, Die MOS 10Y Prime +2% Floating Rate Bond is a low-risk investment.
Return on your investment
When will I get my principal investment back?
Investors will receive their principal investment back on the maturity date, which is set for 30 April 2034.
What if I need my principal investment back sooner than 2034? Will I be able to dispose of my investment?
Yes, the bonds will be tradable on the secondary market on the Mesh platform, subject to availability.
How can I sell or trade my bond tokens?
Details regarding selling or trading your bond will be provided once the asset is made available on the Mesh secondary market.
How is the interest amount calculated?
The quarterly interest (coupon) will be determined by multiplying the interest rate (Prime + 2%) at the beginning of the relevant 3-month period (Interest Period) by the outstanding Principal Amount of the Note and then multiplying this product by the actual number of days elapsed in the Interest Period, divided by 365. The resultant sum will be rounded to the nearest cent, half a cent being rounded upwards.
When will I receive interest payments?
Interest payments are disbursed quarterly – so that’s every three months – until the maturity date.
Where will my interest payments go?
Interest payments are deposited into your Mesh account in the form of mZAR, which you can withdraw into your personal bank account or re-invest into any of the assets offered on the Mesh platform.
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For more press information, please contact:
Connie Bloem, Product owner of Mesh:
hello@meshtrade.co / +1 604 671 4515