Opportunity to lock in Interest Rate cuts

Analysis of the prevailing yield curve indicates that it is discounting between five & six 25bps interest rate cuts by the SARB MPC. Therefore, by entering into a fixed interest rate swap the corporate has an opportunity to lock in these cuts while getting certainty around interest costs.

The last time the market presented this opportunity was in December ’23 and no cuts were forthcoming so the strategy made sense to those that took advantage.