South Africa has issued two new bonds worth $5 billion (R74 billion) in international capital markets, the National Treasury announced. File Photo: IOL

JOHANNESBURG – South Africa has issued two new bonds worth $5 billion (R74 billion) in international capital markets, the National Treasury announced on Tuesday.

In a statement National Treasury said: "The Republic of South Africa was able to successfully place $5 billion in bonds maturing in 2029 (10-year) and 2049 (30-year) in the international capital markets on 23 September 2019, with $2 billion and $3 billion placed in the 2029 and 2049 tranches respectively. 

"Due to favorable pricing and a sizeable order book, the Republic was able to pre-fund an additional $1 billion over the planned $4 billion. Pre-funding is the early issuance of an amount planned to be issued in future years. 

"This is done to take advantage of good pricing and favourable market conditions while reducing future borrowing need. The 10-year bond priced at a coupon rate and re-offer yield of 4.85 percent which represents a spread of 313 basis points above the 10-year US Treasury benchmark bond." 

The National Treasury said the 30-year bond priced at a coupon rate and re-offer yield of 5.75 per cent which represents a spread of 358.6 basis points above the 30-year US Treasury benchmark bond. 

"The transaction was 2.71 oversubscribed with investor demand across Europe, North America, Asia, South America, Middle East, Africa and others," said the statement.

"In terms of investor type, demand was supported by a mixture of Fund Managers, Insurance and Pension Funds, Financial Institutions, Hedge Funds and others. 

"The South African government sees the success of the transaction, believed to be the largest ever out of sub-Saharan Africa, as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management."

The National Treasury said it mandated Citi, Deutsche Bank/Nedbank (consortium), Rand Merchant Bank, and Standard Bank as Joint Bookrunners. Empowerment partners for the respective banks are: Crede Capital Partners, Rho Capital; Theza Capital; and Africa Rising Capital.

The 2019 Budget Review made provision for $2 billion equivalent to be raised in the international capital markets in 2019/20 to fund government’s foreign currency commitments. 

"Of the $4 billion planned for 2018/19, only $2 billion was issued and the remaining $2 billion was deferred to 2019/20, bringing the total foreign borrowing requirement for the year to $4 billion. Issued by National Treasury Date: 24 September 2019," said the statement.

African News Agency (ANA)