SA places $2.5bn bonds in international capital markets amid high demand
SA has successfully placed $2.5bn in the international capital markets; $1bn in 10-year bonds, maturing in 2027, and $1.5bn in 30-year bonds, maturing in 2047, Treasury announced on Wednesday.
"The transactions were more than two times over-subscribed, in aggregate, with investor demand from across the major investor centres in Asia, Continental Europe, the UK and the US," Treasury said in a statement.
It believed the success of the transaction was "an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management. Overall the bonds received bids of just more than $5.3bn — $2.1bn in the 10-year and $3.2bn in the 30-year tranche."
The 10-year bond was priced at a coupon rate of 4.85% (at par value), which represents a spread of 260.5 basis points above the 10-year US treasuries. The 30-year bond was priced at a coupon rate of 5.65% (at par value), which represents a spread of 283.7 basis points above the 30-year US treasuries.
National Treasury appointed joint lead managers Citigroup, HSBC Bank Plc, the Deutsche Bank/Nedbank Limited consortium; and co-lead manager, ABSA Bank Limited, to arrange the new issuance of the foreign currency denominated bonds.
This appointment included each bank’s broad-based, black economic empowerment partner, namely Crede Capital, Nations Capital, Rho Capital and Quartile Capital, respectively.
The proceeds from the bond issuance will be used to finance government’s foreign currency commitment as stipulated in the 2017 budget document.