South Africa places US billion in bonds international capital markets

South Africa places US$3 billion in bonds international capital markets

The South African government has successfully placed US$3 billion in bonds maturing in 2032 and 2052 in the international capital markets on 11 April 2022, the National Treasury has announced.

In a statement, the Treasury said of this, US$1.4 billion and US$1.6 billion would be placed in the 2032 and 2052 tranches respectively.

The 2022 Budget Review made provision for US$3 billion equivalent to be raised in the international capital markets in 2021/22 to fund government’s foreign currency commitments.

“Given the volatility in the market over the period, the decision to raise the foreign currency was delayed in accessing the market in a more constructive issuance window,” it said in a statement on Tuesday.

It said the 10-year bond priced at a coupon and re-offer yield of 5.875 per cent, which represents a spread of 309 basis points above the 10-year US Treasury benchmark bond.

“The 30-year bond priced at a coupon and re-offer yield of 7.300 per cent which represents a spread of 447 basis points above the 30-year US Treasury benchmark bond.

“The final yields reflect a tightening of 37.5bps and 45bps from Initial Price Thoughts on the 10-year and 30-year instruments respectively. The transaction attracted an order book more than US$7.1 billion (2.4 times oversubscribed) with investor demand across the United Kingdom, North America, Europe, Asia, Africa and others. With respect to investor profile, demand came from a combination of Fund Managers, Insurance and Pension Funds, Hedge Funds, Banks and other Financial Institutions.”

Treasury said the South African government viewed the success of the transaction as an expression of continued investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management.

“The National Treasury mandated Absa Bank/HSBC (consortium), Deutsche Bank/Nedbank (consortium) and Rand Merchant Bank as Joint Lead Managers. The empowerment partners for the respective banks were: Tysys Advisory, Nations Capital Advisors; Rho Capital; and THEZA Capital,” reads the statement.

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