The National Treasury still intends launching a rand-denominated Islamic bond, but the timing of the launch is uncertain.
In November 2021, the intention was to still launch it in the 2021/22 fiscal year as a way of diversifying the debt portfolio and introducing a new set of savers into its funding universe.
It has previously issued a $500 million sukuk bond in 2014, when it became the first African nation to issue a sovereign sharia-compliant bond. At the time it received subscriptions worth $2.2 billion and it will be hoping for a similar over-subscription when it launches its rand-denominated bond.
The Treasury said at the time that the decision to issue an Islamic bond has been informed by a drive to broaden the investor base and to set a benchmark for state-owned companies seeking diversified sources of funding for infrastructure development.
It said the sukuk bond had an investor distribution consisting of 59% from the Middle East and Asia, 25% from Europe, 8% from the US and the balance from the rest of the world.
S&P Global Ratings cut South Africa’s credit rating to junk in April 2017 when Pravin Gordhan was fired as finance minister by former president Jacob Zuma.
In 2018, the Treasury issued $2 billion in foreign bonds despite the S&P downgrade and the transaction was oversubscribed.
Further issuance of $3 billion is still expected in 2021/22, and over the next three years the government will raise an additional expected $11 billion in global capital markets.
It has already received some $2.75 billion from multilateral development lenders such as the BRICS New Development Bank and the World Bank this fiscal year.
BUSINESS REPORT ONLINE