Treasury will launch another Islamic bond in 2021/22
By Helmo Preuss
PRETORIA - The National Treasury will launch another Islamic bond in 2021/22 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 (R7.21 billion) Sukuk bond in 2014, when it became the first African nation to issue a sovereign Shariah-compliant bond.
At the time it received subscriptions worth $2.2 billion and it will be hoping for a similar oversubscription 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 percent from the Middle East and Asia, 25 percent from Europe, 8 percent 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 expected in 2021/22 and over the next three years, the government will raise an additional $10 billion in global capital markets.