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Cape Town - South Africa's successful placement of $2.5bn (R33bn) in new notes in international capital markets is an expression of investor confidence in the country’s sound macro-economic policy framework, National Treasury said on Wednesday.
The proceeds from the bond issuance will be used to finance government’s foreign currency commitment as stipulated in the 2017 budget, Treasury said in a statement.
These new notes are maturing in 2027 (10-year) and 2047 (30-year).
Treasury said $1bn was allocated to the 10-year bond and $1.5bn to the 30-year bond.
The transactions were more than two times oversubscribed in aggregate with investor demand from across the major investor centres in Asia, Continental Europe, the UK and the US.
Overall the bonds received bids of just over $5.3bn to $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, the Deutsche Bank/Nedbank consortium and co-lead manager Absa Bank to arrange the new issuance of the foreign currency denominated bonds.
This appointment included each bank’s BBBEE partner, namely Crede Capital, Nations Capital, Rho Capital and Quartile Capital respectively.
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