Hive of activity in Die MOS Bond secondary market

The flurry of trading activity on Die MOS 10Y Prime +2% Floating Rate Bond secondary market is up-ending the received wisdom around traditional capital markets – and it indicates a strong demand for this type of trading on Mesh.trade.

“The secondary market for Die MOS Bond notes has been highly active,” says Marina Oosthuizen, Head of Platform Operations at Mesh.trade. “This is unusual, given the nature of the asset. With bonds, one would expect investors to buy and hold to maturity, which in the case of the MOS Bond is 2034. They’re typically not actively traded after issuance. For the issuer, that’s a clear indication that there’s a market for this kind of tokenised asset.”

The secondary market came after the note’s successful issuance on Mesh.trade in April 2024. The first quarterly coupon payment was made to investors at the end of July, and the secondary market opened in August.

A secondary market is a space for investors to buy and sell assets amongst each other. Importantly, these are trades of existing bond notes that take place between investors; the issuer does not issue any new bond notes.

In the case of Die MOS 10Y Prime+2% Floating Rate Bond, the returns are the same as they were at their issuance: South Africa’s prime rate plus 2%, or 13.50% (following September’s interest rate cuts, as announced by the South African Reserve Bank’s Monetary Policy Committee. As this is a 10-year bond, there are still many coupon payments left in this asset’s lifetime.

Die MOS 10Y Prime+2% Floating Rate Bond was originally issued by MOS Uitreiker, a wholly owned subsidiary of Die MOS Inisiatief, a private company established by the Trust for Afrikaans Education (TAO) to create a network of Afrikaans medium schools that provide quality education to learners from early childhood development to Grade 12. These schools use innovative teaching
methodologies to create inclusive and affordable learning environments.

The Bond aimed to raise funding to expand Die MOS Inisiatief’s network of private schools offering mother-tongue education – which UNESCO recognises as a key factor for inclusion and quality learning. In the six months since the primary market issuance, those funds have been put to good use.

Die MOS Inisiatief has opened Knikkievallei Kleuterskool, a nursery school in Krugersdorp which will welcome its first learners from January 2025. The school will serve as a feeder school for Laerskool Kenmare. Funds from the tokenised bond issuance also enabled the completion of five new classrooms at Karos Akademie in Beaufort West, while partially funding the Emmanuel

Kindersentrum, a nursery school and after-care facility in Pretoria East. Meanwhile, Kosmos Akademie in Middelburg, which was funded by the tokenised bond issuance, officially opened in August with 12 modern classrooms and room for 205 learners. Kosmos Akademie is equipped with solar panels and renewable water sources, making it a model of sustainability.

To participate in the Die MOS 10Y Prime+2% Floating Rate Bond secondary market, simply open a Mesh account, fund your account, and place a Buy Order on the Bond’s Asset Detail page. The prices for buying and selling are calculated in real time and are clearly visible on Mesh’s Smart Asset MarketplaceMarketplace.

When you click on the “Place Buy Order” button, a pop-up window will open, allowing you to indicate how many notes you wish to buy. Remember that investors must subscribe to whole numbers of bond notes or tokens (valued at approximately R5 000 each).

This Smart Asset is a low-risk investment, underwritten and guaranteed by the Trust vir Afrikaanse Kuns, Kultuur en Erfenis (“TAKKE”), so in the unlikely case of Die MOS being unable to fulfill its obligations, TAKKE is legally obliged to cover the quarterly coupon payments within a specified timeframe. It is also an opportunity to own a piece of history: this is the first tokenised corporate bond in Africa, made possible through Mesh’s blockchain-based, Finance 3.0 ecosystem.