Windhoek - Namibia sold a debut 10-year rand bond on Thursday, attracting double the amount of bids offered, mainly from South African investors, the finance ministry said.
Finance Minister Saara Kuugongelwa-Amadhila said his government issued R850m of 10-year paper at 8.26%, higher than South Africa's near-10-year bond, which was trading at 7.20%.
Namibia, one of the world's largest diamond producers, pegs its currency to the rand in a monetary union with South Africa that also includes Swaziland and Lesotho.
The choice of a rand bond mitigates any currency risk. It is Namibia's second bond issue outside its borders after a successful $500m, 10-year issue in October last year.
The Eurobond has done well since, with the yield falling to a low of 3.75% a month ago from 5.64% in November last year.
Yields in South African debt have hit all time lows this year as a constant search for yield in emerging markets combined with South Africa's entry into a prominent global bond index on Oct. 1 to attract investors.
Thursday's issue is the first sovereign rand bond not issued by the South African government and is part of Namibia's plan to borrow between 2 and 3 billion rand over the next three years.
The money will help fund a budget deficit expected at 4.4% of GDP this year.
Kuugongelwa-Amadhila said the transaction set a benchmark for other issuers in Namibia to borrow from South Africa's established bond market.
South Africa is Namibia's main trading partner with 80% of its exports going through South Africa, while Namibia imports 60% of its consumables from South Africa.